(a) The state funding board created by § 9-9-101 shall adopt an investment policy and a funds allocation policy for the lottery for education account established in § 4-51-111 designed to maximize recurring revenues available for appropriation. An amount of funds in the lottery for education account, as determined by the state funding board, may be invested pursuant to this section. The funds may be invested in the state pooled investment fund established by § 9-4-603, the intermediate-term investment fund established by § 9-4-608, the chairs of excellence endowment fund established by § 49-7-501, any securities authorized in § 9-4-602 or in any securities or classes of securities not specifically authorized in § 9-4-602 that are approved by resolution of the state funding board. All earnings attributable to the investments shall be credited to the lottery for education account.

(b) TSAC shall not draw funds from the lottery for education account that are invested pursuant to this section unless no other lottery revenues are available to make payments of the scholarships and grants established pursuant to this part. If TSAC anticipates that it may need to draw funds from the lottery for education account that are invested pursuant to this section, then TSAC shall notify the general assembly, the state treasurer, the state funding board and the Tennessee higher education commission at least ninety (90) days before the date the need for such funds is expected to occur.

(c) If for fiscal year 2008-2009 the board determines that earnings on the lottery for education account will be sufficient to meet the funding requirements for scholarships for that fiscal year, the board is authorized to transfer an amount not to exceed ten million dollars ($10,000,000) from the lottery for education account to the energy efficient schools fund, if the fund is created by law.