Introduced Version






HOUSE BILL No. 1002

_____


DIGEST OF INTRODUCED BILL



Citations Affected: IC 4-4-31 ; IC 4-12-1-14.3 ; IC 8-9.5-9.

Synopsis: Securitization of tobacco settlement funds. Establishes the tobacco settlement authority and provides for the sale of bonds payable from future tobacco settlement payments to the state. Makes related changes in the statute governing distributions from the tobacco master settlement agreement fund. Appropriates money from the tobacco master settlement agreement fund to the tobacco settlement authority.

Effective: July 1, 2003.





Brown C, Murphy




    January 15, 2003, read first time and referred to Committee on Public Health.







Introduced

First Regular Session 113th General Assembly (2003)


PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional provision adopted), the text of the new provision will appear in this style type. Also, the word NEW will appear in that style type in the introductory clause of each SECTION that adds a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts between statutes enacted by the 2002 Regular or Special Session of the General Assembly.

HOUSE BILL No. 1002



    A BILL FOR AN ACT to amend the Indiana Code concerning state offices and administration and to make an appropriation.

Be it enacted by the General Assembly of the State of Indiana:

SOURCE: IC 4-4-31; (03)IN1002.1.1. -->     SECTION 1. IC 4-4-31 IS ADDED TO THE INDIANA CODE AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2003]:
     Chapter 31. Tobacco Settlement Authority
    Sec. 1. As used in this chapter, "authority" refers to the tobacco settlement authority created in this chapter.
    Sec. 2. As used in this chapter, "board" refers to the governing board of the authority.
    Sec. 3. As used in this chapter, "bonds" means bonds, notes, and any other obligations and financing arrangements issued or entered into by the authority under this chapter, and any such bonds, notes, obligations, or other financing arrangements entered into to refund the foregoing, whether on a current or an advance basis.
    Sec. 4. As used in this chapter, "financing costs" means capitalized interest, capitalized operating expenses, debt service reserves, operating reserves, and any cost of issuance, credit

enhancement, swap agreement under IC 8-9.5-9 , or item of expense directly or indirectly payable or reimbursable by the authority and related to the authorization, sale, or issuance of the bonds, including, but not limited to, underwriting fees and fees and expenses for professional consultants and fiduciaries.
    Sec. 5. As used in this chapter, "master settlement agreement" has the meaning set forth in IC 24-3-3-6.
    Sec. 6. As used in this chapter, "net proceeds" means the amount of proceeds remaining following each sale of bonds that is not required by the authority to pay the financing costs.
    Sec. 7. As used in this chapter, "qualifying statute" has the meaning set forth in the master settlement agreement. For purposes of this chapter, IC 24-3-3 is the qualifying statute.
    Sec. 8. As used in this chapter, "residual interests" means the income of the authority that is in excess of the authority's requirements for its reserve fund or to pay its operating expenses, debt service, whether at maturity or upon redemption, or any other contractual obligations under any resolution or that may be incurred in connection with the issuance of the bonds.
    Sec. 9. As used in this chapter, "sales agreement" means any agreement authorized under this chapter in which the state sells to the authority a portion of the amounts and revenues required to be paid by tobacco product manufacturers to the state and the state's rights to receive the amounts and revenues under the master settlement agreement.
    Sec. 10. As used in this chapter, "state" means the state of Indiana, acting by and through its budget agency, or any other state agency, state office, or state officer required by law or contract to act on behalf of the state of Indiana for a particular purpose.
    Sec. 11. (a) The general assembly declares it to be the public policy of the state and a recognized governmental function to assist in securitizing the revenue stream from the master settlement agreement between the state and tobacco product manufacturers in order to provide a current and reliable source of revenue for the state. The purpose of this chapter is to establish a tobacco settlement authority having the power to purchase certain rights of the state under the master settlement agreement and to issue nonrecourse revenue bonds.
    (b) This chapter, being necessary for the welfare of the state and its inhabitants, shall be liberally construed to effect the purposes thereof.


    (c) The general assembly hereby finds that the following activities are necessary and proper and serve a public purpose or purposes through the promotion of economic development, education, health and general welfare, and will be of benefit to the health and general welfare of the state and its citizens:
        (1) The creation of the authority.
        (2) Entering into one (1) or more sales agreements.
        (3) The sale to the authority of a portion of the amounts and revenues required to be paid by tobacco product manufacturers to the state and the state's right to receive the amounts and revenues under the master settlement agreement.
        (4) The issuance of bonds.
    Sec. 12. The tobacco settlement authority is established, and is a public body corporate and politic, separate from the state, and not a state agency. The exercise by the authority of its powers constitutes an essential public and governmental function.
    Sec. 13. (a) The powers of the authority are vested in and shall be exercised by a board consisting of the following seven (7) members:
        (1) The governor, or the governor's designee, who serves as chairperson.
        (2) The lieutenant governor, or the lieutenant governor's designee, who serves as vice chairperson.
        (3) The treasurer of state, or the treasurer of state's designee.
        (4) Four (4) members appointed by the governor who are persons of known probity and who possess adequate capacity for the performance of the duties of members of the authority. Not more than two (2) of the members appointed under this subdivision may be members of the same political party.
    (b) The board shall elect from among the board's members the other officers the board considers necessary or convenient.
    (c) The term of the members of the board appointed by the governor shall be four (4) years from the date of their appointment, except that the terms of two (2) of the initial appointees, as determined by the governor, shall be for two (2) years from the date of their appointment.
    (d) Each member of the board appointed by the governor:
        (1) shall hold office for the term of the member's respective appointment;
        (2) shall continue to serve after the expiration of the appointment until a successor is appointed and qualified;
        (3) is eligible for reappointment; and
        (4) serves at the pleasure of the governor and may be removed from office by the governor at any time.
    (e) The members of the board are not entitled to any compensation for their services but are entitled to reimbursement for actual and necessary expenses on the same basis as state employees.
    Sec. 14. Four (4) members of the board constitute a quorum. Four (4) affirmative votes are required for the board to take action.
    Sec. 15. Meetings of the board shall be held in accordance with IC 5-14-1.5 and at the call of the chair or when a majority of the members of the board so requests.
    Sec. 16. (a) This section applies to a meeting of the board at which at least four (4) members of the board are physically present at the place where the meeting is conducted.
    (b) A member of the board may participate in a meeting of the board by using a means of communication that permits:
        (1) all other members of the board participating in the meeting; and
        (2) all members of the public physically present at the place where the meeting is conducted;
to simultaneously communicate with each other during the meeting.
    (c) A member of the board who participates in a meeting under subsection (b) is considered to be present at the meeting.
    (d) The memoranda of the meeting prepared under IC 5-14-1.5-4 must also state the name of each member of the board who:
        (1) was physically present at the place where the meeting was conducted;
        (2) participated in the meeting by using a means of communication described in subsection (b); and
        (3) was absent.
    Sec. 17. Any member or employee of the authority who has, will have, or later acquires an interest, direct or indirect, in any transaction with the authority shall immediately disclose the nature and extent of the interest in writing to the authority as soon as the member or employee has knowledge of the actual or prospective interest. The disclosure shall be announced in open meeting and entered upon the minutes of the authority. Upon disclosure, the member or employee shall not participate in any

action by the authority authorizing the transaction. However, such an interest shall not invalidate actions by the authority with the participation of the disclosing member prior to the time when the member became aware of the interest.
    Sec. 18. The authority may, without the approval of the attorney general or any other state officer, employ independent counsel, bond counsel, other attorneys, financial advisers, investment bankers, auditors, other technical or professional assistants, and such other officers, agents and employees (including an executive director), permanent or temporary, as the authority considers necessary or convenient to carry out the efficient operation of the authority, and shall determine the qualifications, duties, compensation, and terms of service of all such persons. The chairman may appoint the initial executive director. The executive director is the chief operating officer of the authority, and the board shall establish the executive director's duties and responsibilities, including the powers that the authority has under this section. The board may delegate to an officer of the authority, the executive director, or one (1) or more other employees or agents of the authority such duties and responsibilities as the board considers necessary or convenient, including the powers that the authority has set forth in this section. Employees of the authority shall not be considered employees of the state.
    Sec. 19. (a) The authority shall:
        (1) adopt:
            (A) rules under IC 4-22-2 ; or
            (B) a policy;
        establishing a code of ethics for its employees; or
        (2) decide it wishes to be under the jurisdiction and rules adopted by the state ethics commission.
    (b) A code of ethics adopted by rule or policy under this section must be consistent with state law and approved by the governor.
    Sec. 20. The authority has all the general powers necessary to carry out its purposes and duties and to exercise its specific powers. In addition to other powers specified in this chapter, the authority may:
        (1) sue and be sued in the name of the authority;
        (2) make and execute agreements, contracts, and other instruments, with any public or private person, in accordance with this chapter;
        (3) invest monies held by the authority or on its behalf under any trust agreement of the authority or otherwise in the

manner determined by resolution of the authority or under the trust agreement (an investment under this subdivision is not restricted by or subject to any other law);
        (4) establish any general or special funds, accounts, or subaccounts, and controls on deposits to and disbursements from them, as it finds necessary, desirable, or convenient for the implementation of this chapter;
        (5) procure insurance, other credit enhancements, and other financing arrangements for its bonds to fulfill its purposes under this chapter, including but not limited to municipal bond insurance and letters of credit;
        (6) accept appropriations, gifts, grants, loans, or other aid from public or private entities;
        (7) establish a stable source of revenue to be used for the purposes designated in this chapter;
        (8) enter into one (1) or more sales agreements with the state for purchase of a portion of the amounts and revenues due to the state under the master settlement agreement, and of the state's rights to receive those amounts and revenues;
        (9) issue bonds in one (1) or more series;
        (10) sell, pledge, or assign, as security, all or a portion of the revenues derived by the authority under any sales agreement, to provide for and secure the issuance of its bonds;
        (11) manage its funds, obligations, and investments as necessary and as consistent with its purpose;
        (12) without complying with IC 4-22-2 , adopt, amend, and repeal bylaws, rules, and regulations not inconsistent with this chapter and necessary or convenient to regulate its affairs and to carry into effect the powers, duties, and purposes of the authority and conduct its business; and
        (13) exercise any other power reasonably required, convenient, or desirable to implement the purposes of this chapter.
The rule of law that any doubt as to the existence of a power of the authority shall be resolved against the existence of that power is abrogated. Any doubt as to the existence of a power of the authority shall be resolved in favor of its existence.
    Sec. 21. The authority may not:
        (1) exercise the power of eminent domain; or
        (2) levy taxes of any kind.
    Sec. 22. (a) The authority may issue its bonds in principal amounts in the principal amounts as may be necessary or

appropriate to provide sufficient funds for:
        (1) the exercise of any of its powers or achievement of its purposes;
        (2) the payment of debt service on its bonds;
        (3) the establishment of debt service or operating reserves to secure the bonds;
        (4) the costs of issuance of its bonds and credit enhancements, if any; and
        (5) all other financing costs or other expenditures of the authority incident to and necessary to carry out its purposes or powers.
The net proceeds of the bonds shall be deposited in the fund specified by law, except that the net proceeds of refunding bonds shall be deposited in accordance with a trust agreement of the authority.
    (b) Before issuing bonds under this chapter, the authority shall publish a notice of its determination to issue the bonds. The notice shall be published one (1) time in two (2) newspapers published and of general circulation in the city of Indianapolis. No action to contest the validity of:
        (1) a series of bonds issued by the authority; or
        (2) any sales agreement entered into by the authority and the state related to the bonds;
may be brought after the fifteenth day following the publication of the notice. If an action challenging the bonds or sales agreement is not brought within the time prescribed by this subsection, the bonds or sales agreement shall be conclusively presumed to be fully authorized and valid under the laws of the state and any person or entity is estopped from further questioning the authorization, validity, execution, delivery, or issuance of the bonds or the sales agreement.
    (c) The bonds, when issued, shall have all the qualities of negotiable instruments, subject to provisions for registration, under IC 26-1 and are incontestable in the hands of a bona fide purchaser or owner of the bond for value. Bonds issued under this chapter are exempt from the registration requirements of IC 23-2-1 and any other state securities registration statutes.
    (d) The authority's bonds shall:
        (1) bear the date or dates;
        (2) mature at the time or times;
        (3) be in the denominations;
        (4) be in the form;


        (5) be registered or registrable in the manner;
        (6) be made transferable, exchangeable, and interchangeable;
        (7) be payable in the medium of payment and at the place or places;
        (8) be subject to the terms of redemption;
        (9) bear the fixed or variable rate or rates of interest;
        (10) be payable at the time or times; and
        (11) be sold at a public or negotiated sale in the manner and at the price or prices;
as the authority determines.
    (e) The bonds shall be executed by one (1) or more officers of the authority and by the trustee or paying agent. Execution of the bonds may be by manual or facsimile signature.
    (f) The bonds of the authority are subject to the terms, conditions, covenants, and protective provisions that are found necessary or desirable by the authority, including, but not limited to, pledges of the authority's assets, setting aside of reserves, and other provisions the authority finds are necessary or desirable for the security of bondholders.
    (g) Any pledge of revenues to be derived by the authority under a sales agreement or from any other source, and the right to receive revenues under a sales agreement or from any other source, or any pledge of a special fund, account, or subaccount created by the authority, together with any investment earnings, is valid and binding at the time the pledge is made. Property so pledged is immediately subject to the lien of the pledge without any physical delivery thereof or further act. The lien of such a pledge is valid and binding as against all parties having claims of any kind in tort, contract, or otherwise against the authority, regardless of whether the parties have notice of the lien. Notwithstanding any other provision of law to the contrary, the resolution or trust agreement of the authority or any other instrument by which the pledge is created need not be recorded or filed except in the records of the authority to perfect the pledge.
    (h) Neither a member of the board nor a person executing bonds or notes issued under this article is liable personally on the bonds or notes.
    (i) The authority may, out of any funds or revenues available therefor, purchase its bonds in the open market.
    Sec. 23. (a) The bonds issued under this chapter by the authority constitute the special obligations only of the authority and are payable solely from and secured exclusively by the pledge by the

authority of certain funds and revenues, and rights to receive funds or revenues in accordance with this chapter. Neither the faith and credit or taxing power of the state or any political subdivision of the state is pledged to the payment of principal or interest on the bonds. Each bond of the authority must plainly state on its face that the bond does not constitute an indebtedness or lending of the credit of the state within the meaning or application of any constitutional provision or limitation but that it is payable solely as to both principal and interest from the funds, revenues, and rights pledged under this chapter. The provisions of this chapter and the covenants and undertakings of the authority as expressed in any proceedings preliminary to or in connection with the issuance of the bonds may be enforced by a bondholder by action for injunction or mandamus against the authority or any officer, agent, or employee of the authority, but no action for monetary judgment may be brought against the state for any violations of this chapter.
    (b) All property of the authority is public property devoted to an essential public and governmental function and purpose and is exempt from all taxes and special assessments, direct or indirect, of the state or a political subdivision of the state. All bonds issued under this chapter are issued by a body corporate and politic of this state, but not a state agency, and for an essential public and governmental purpose, and the bonds, the interest thereon, the proceeds received by the holder from the sale of the bonds to the extent of the holder's cost of acquisition proceeds received upon redemption prior to maturity, and proceeds received at maturity and the receipt of the interest and proceeds are exempt from taxation in the state for all purposes except the financial institutions tax imposed under IC 6-5.5 or a state inheritance tax imposed under IC 6-4.1.
    Sec. 24. Contracts entered into by the authority shall be entered into in the name of the authority and not in the name of the state of Indiana. The obligations of the authority under the contracts are obligations only of the authority and are not in any way obligations of the state of Indiana.
    Sec. 25. Bonds issued under the provisions of this chapter are hereby made securities in which all public officers and agencies of the state, all insurance companies, banking associations, investment companies, executors, administrators, trustees, and other fiduciaries may properly and legally invest funds, including capital in their control or belonging to them. These bonds are

hereby made securities that may properly and legally be deposited with and received by any officer or agency of the state for any purpose for which the deposit of bonds or obligations of the state is now or may hereafter be authorized by law.
    Sec. 26. (a) Without complying with any other law governing the sale or disposition of property by the state, the state may sell and assign to the authority, and the authority may purchase, all of the state's right to receive a portion not to exceed forty percent (40%) of the state's annual share of the amounts and revenues due to the state under the master settlement agreement, and of the state's rights to receive those amounts and revenues. The state, including the governor and the attorney general, may take any action necessary or convenient to facilitate and complete the sale. The authority may take any action necessary or convenient to facilitate and complete the purchase.
    (b) A sale and assignment made under this section is irrevocable. All or a portion of the amounts and revenues, and the right to receive the amounts and revenues, sold to the authority shall be pledged to the bondholders. The sale and assignment shall constitute and be treated as a true sale and absolute transfer of the property so sold and assigned and not as a pledge or other security interest granted by the state for any borrowing. The characterization of a sale and assignment as an absolute transfer shall not be negated or adversely affected by the fact that only a portion of the amounts and revenues due to the state under the master settlement agreement is being sold and assigned, by the state's acquisition or retention of an ownership interest in the portion of the amounts and revenues due under the master settlement agreement not so sold and assigned, or for any other reason.
    (c) The state hereby covenants and agrees with the holders of any bonds that so long as any bonds of the authority issued under this chapter are outstanding and unpaid, the state will not limit or alter the rights vested in the authority to fulfill the terms of any agreements made with, or make payments to, the holders of the bonds or in any way impair the rights and remedies of the bondholders, until the bonds, together with interest thereon, and all costs and expenses in connection with any action or proceedings by or on behalf of the bondholder are fully paid, satisfied, and discharged.
    (d) The terms of any sales agreement must provide that on and after the effective date of the sale and assignment:


        (1) the state shall have no right, title, or interest in the property sold and assigned;
        (2) the property sold and assigned is the property of the authority and not the property of the state;
        (3) the property sold and assigned shall be owned, received, held, and disbursed by the authority or its trustee or assignee, and not by the state;
        (4) none of the property sold and assigned shall be subject to garnishment, levy, execution, attachment, or other process, writ, (including writ of mandate), or remedy in connection with the assertion or enforcement of any debt, claim, settlement, or judgment against the state; and
        (5) the portion of the amounts and revenues due under the master settlement agreement that are sold and assigned to the authority must be paid directly to the authority or its trustee or assignee and shall not be considered money drawn from the state treasury.
    (e) Any sales agreement may include such other agreements and covenants of the state as may be permitted by the constitution of the state and as may be necessary or convenient for the sale and assignment of the portion of the amounts and revenues due under the master settlement agreement and the issuance of bonds to finance the purchase by the authority.
    (f) The state shall:
        (1) notify the independent auditor and the escrow agent under the master settlement agreement that a portion of the amounts and revenues due under the master settlement agreement has been sold and assigned to the authority; and
        (2) irrevocably instruct the independent auditor and the escrow agent that, after the date of the notice under subdivision (1), the portion of the amounts and revenues due under the master settlement agreement sold and assigned to the authority is to be paid directly to the trustee under the trust agreement of the authority for the benefit of the owners of the bonds secured by a pledge of those amounts and revenues, until the bonds are no longer outstanding under the resolution or trust agreement.
    Sec. 27. Members of the board, the officers and employees of the authority, the agents of the authority, and any other persons executing bonds issued under this chapter are not subject to personal liability or accountability by reason of any act authorized by this chapter, including, without limitation, the issuance of

bonds, the failure to issue bonds, the execution of bonds, and the exercise of any other powers contemplated by this chapter.
    Sec. 28. (a) The authority is prohibited from filing a voluntary petition under chapter 9 of the federal bankruptcy code or any corresponding chapter or section that may, from time to time, be in effect. A governmental officer, governmental organization, or other entity or person may not authorize the authority to be a debtor under chapter 9 of the federal bankruptcy code or any successor or corresponding chapter or sections.
    (b) This section shall be part of any contractual obligation owed to the holders of bonds issued under this chapter. Any such contractual obligation shall not subsequently be modified by state law before the date that is three hundred sixty-six (366) days after the date upon which the authority no longer has any bonds outstanding.
    Sec. 29. The authority shall dissolve not later than two (2) years from the date of final payment of all of its outstanding bonds and the satisfaction of all outstanding obligations of the authority, except to the extent necessary to remain in existence to fulfill any outstanding covenants or provisions with bondholders or third parties made in accordance with this chapter. Upon dissolution of the authority, all of the authority's property shall be transferred and assigned to the state and the authority shall execute all necessary assignments and other documents as may be necessary or convenient to transfer and assign its property to the state, including the authority's right, title, or ownership interest in amounts and revenues due under the master settlement agreement, which amounts shall be deposited in the state general fund.
    Sec. 30. Before issuing any bonds, the authority shall enter into a sales agreement that includes the agreement of the state to:
        (1) diligently enforce the authority's right to receive the portion of the amounts and revenues due under the master settlement agreement and sold under the sales agreement, to the full extent permitted by the master settlement agreement;
        (2) diligently enforce the qualifying statute as contemplated by the master settlement agreement against all tobacco product manufacturers that are selling tobacco products in Indiana and are not signatories to the master settlement agreement;
        (3) neither amend the master settlement agreement nor take any other action that would in any way:


            (A) alter, limit, or impair the authority's right to receive the portion of the amounts and revenues due under the master settlement agreement and sold under the sales agreement;
            (B) limit or alter the rights vested in the authority by this chapter or other law to fulfill its agreements with the bond owners; or
            (C) impair the rights and remedies of the bond owners or the security for the bonds;
        until the bonds, together with the interest on the bonds and all costs and expenses in connection with any action or proceedings by or on behalf of the bond owners, are fully paid and discharged (however, nothing in this subdivision shall be construed to preclude the state's regulation of smoking and taxation and regulation of the sale of cigarettes or other tobacco products);
        (4) not amend, supersede, or repeal the qualifying statute in any way that would violate section 26(c) of this chapter; or
        (5) take no action that would adversely affect the tax exempt status of any tax exempt bonds issued by the authority.
    Sec. 31. The authority shall contract with an independent certified public accountant for an annual financial audit of the authority. The certified public accountant shall present an audit report not later than seven (7) months after the end of each fiscal year of the authority.
    Sec. 32. The state board of accounts may at any time conduct an audit of the authority.
    Sec. 33. The authority shall submit copies of its annual budget and the audit report referred to in section 31 of this chapter to the budget director, the legislative council, and the state board of accounts.
    Sec. 34. Income or revenues of the authority not required to meet its obligations (including redemption obligations on its bonds) shall be paid over to the state general fund if directed by the governor.

     Sec. 35. (a) As used in this section, "sale portion" means the portion of the punitive damage award payment that is equal to the percentage determined under section 26 of this chapter.
    (b) This section applies upon the entry of a judgment that includes a punitive damage award in a civil action related to tobacco products in which:
        (1) the state of Indiana, or an agency of the state of Indiana, is the party to the action receiving the award; and
        (2) a tobacco manufacturer who participates in the master settlement agreement is the party against whom the judgment was entered.
IC 34-51-3-6 does not apply to such a punitive damage award.
    (c) Upon entry of a judgment described in this section, the right of the state of Indiana, or an agency of the state of Indiana, to receive the sale portion of the punitive damage award payment described in this section is assigned to the authority. For as long as this assignment is in effect, any sale portion of a punitive damage award payment received by the state of Indiana, or an agency of the state of Indiana, in settlement of a judgment described in this section or as satisfaction or partial satisfaction of a judgment to which this section applies shall be considered to be held for the benefit of the authority and shall be remitted immediately after receipt of the payment, at the direction of the treasurer of state, to the authority subject to any pledge under this chapter.
    (d) The authority may spend money received under this section in accordance with this chapter, subject to any pledge under this chapter.
    (e) That portion of the punitive damages award in excess of the sale portion under this section shall be paid to the state of Indiana or an agency of the state of Indiana, as applicable, and used as otherwise provided by law.
    (f) The assignment under this section terminates upon the earlier of the date on which:
        (1) the authority is dissolved pursuant to section 29 of this chapter;
        (2) all outstanding bonds and other agreements of the authority have been paid in full or otherwise discharged; or
        (3) a state court has entered a final judgment from which no further appeal is allowed ordering the judgment debtor tobacco manufacturer to pay the state both its obligations under the master settlement agreement and any punitive damages to be paid to the state without setoff, credit or reduction of one (1) obligation on account of the other.

SOURCE: IC 4-12-1-14.3; (03)IN1002.1.2. -->     SECTION 2. IC 4-12-1-14.3 , AS AMENDED BY P.L.291-2001, SECTION 52, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2003]: Sec. 14.3. (a) As used in this section, "master settlement agreement" has the meaning set forth in IC 24-3-3-6.
    (b) There is hereby created the Indiana tobacco master settlement agreement fund for the purpose of depositing and distributing money received under the master settlement agreement. The fund consists of:
        (1) all money received by the state under the master settlement agreement;
        (2) appropriations made to the fund by the general assembly; and
        (3) grants, gifts, and donations intended for deposit in the fund.
    (c) Money may be expended, transferred, or distributed from the fund during a state fiscal year only in amounts permitted by subsections (d) through (e), and only if the expenditures, transfers, or distributions are specifically authorized by another statute.
    (d) The maximum amount of expenditures, transfers, or distributions that may be made from the fund during the state fiscal year beginning July 1, 2000, is determined under STEP THREE of the following formula:
        STEP ONE: Determine the sum of money received or to be received by the state under the master settlement agreement before July 1, 2001.
        STEP TWO: Subtract from the STEP ONE sum the amount appropriated by P.L.273-1999, SECTION 8, to the children's health insurance program from funds accruing to the state from the tobacco settlement for the state fiscal years beginning July 1, 1999, and July 1, 2000.
        STEP THREE: Multiply the STEP TWO remainder by fifty percent (50%).
    (e) (d) The maximum amount of expenditures, transfers, or distributions that may be made from the fund during the state fiscal year beginning July 1, 2001, 2003, and each state fiscal year after that is determined under STEP THREE of the following formula:
        STEP ONE: Determine the amount of money received or to be received by payable to the state under the master settlement agreement during that state fiscal year.
        STEP TWO: Multiply Subtract from the STEP ONE amount by sixty percent (60%). the amount of money that is payable to the Indiana tobacco settlement authority during that state fiscal year under the terms of a sales agreement entered into under IC 4-4-31.
        STEP THREE: Add to the STEP TWO product remainder any amounts that were available for expenditure, transfer, or distribution under this subsection or subsection (d) accumulated in the fund during preceding state fiscal years but that were not expended, transferred, or distributed.
    (f) The following amounts shall be retained in the fund and may not be expended, transferred, or otherwise distributed from the fund:
        (1) All of the money that is received by the state under the master settlement agreement and remains in the fund after the expenditures, transfers, or distributions permitted under subsections (c) through (e).
        (2) All interest that accrues from investment of money in the fund, unless specifically appropriated by the general assembly. Interest that is appropriated from the fund by the general assembly may not be considered in determining the maximum amount of expenditures, transfers, or distributions under subsection (e).
    (g) (e) The fund shall be administered by the budget agency. Notwithstanding IC 5-13, the treasurer of state shall invest the money in the fund not currently needed to meet the obligations of the fund in the same manner as money is invested by the public employees retirement fund under IC 5-10.3-5. The treasurer of state may contract with investment management professionals, investment advisors, and legal counsel to assist in the investment of the fund and may pay the state expenses incurred under those contracts from the fund. Interest that accrues from these investments shall be deposited in the fund. Money in the fund at the end of the state fiscal year does not revert to the state general fund.
    (h) (f) The state general fund is not liable for payment of a shortfall in expenditures, transfers, or distributions from the Indiana tobacco master settlement agreement fund or any other fund due to a delay, reduction, or cancellation of payments scheduled to be received by the state under the master settlement agreement. If such a shortfall occurs in any state fiscal year, the budget agency shall make the full transfer to the regional health facilities construction account and then reduce all remaining expenditures, transfers, and distributions affected by the shortfall.
SOURCE: IC 8-9.5-9-2; (03)IN1002.1.3. -->     SECTION 3. IC 8-9.5-9-2 , AS AMENDED BY P.L.273-1999, SECTION 45, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2003]: Sec. 2. As used in this chapter, "authority" means:
        (1) an authority or agency established under IC 8-1-2.2 or IC 8-9.5 through IC 8-23;
        (2) the commission established under IC 4-13.5;
        (3) only in connection with a program established under IC 13-18-13 or IC 13-18-21 , the bank established under IC 5-1.5; or
        (4) a fund or program established under IC 13-18-13 or IC 13-18-21 ; or
        (5) the authority established under IC 4-4-31.

SOURCE: IC 8-9.5-9-8; (03)IN1002.1.4. -->     SECTION 4. IC 8-9.5-9-8 , AS AMENDED BY P.L.273-1999, SECTION 48, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2003]: Sec. 8. (a) With respect to all leases and contracts entered into by the authority with the Indiana department of transportation, the Indiana department of administration, a fund or program established under IC 13-18-13 or IC 13-18-21 , or any other entity to support obligations, the lease or contract may provide that payments under a swap agreement are treated as a debt service on the obligations or as additional rental or other payment due under the lease or contract as the authority may determine.
    (b) The authority may determine that payments under a swap agreement may be integrated with payments on obligations for the purpose of meeting any statutory requirements related to the issuance of obligations. The authority may also determine to secure its payments under the swap agreement with the same collateral securing the related obligations, either on a parity or a subordinate basis.
SOURCE: ; (03)IN1002.1.5. -->     SECTION 5. [EFFECTIVE JULY 1, 2003] There is appropriated to the tobacco settlement authority established by IC 4-4-31 , as added by this act, one hundred ninety-five million dollars ($195,000,000) from the Indiana tobacco master settlement agreement fund for deposit in the same fund in which net proceeds of bonds issued by the authority must be deposited, as provided by IC 4-4-31 , as added by this act. The money appropriated by this SECTION does not revert to the Indiana tobacco master settlement agreement fund at the close of any state fiscal year but remains available for distribution.