(a)

(1) The county aid funds shall be divided and distributed to the various counties of the state as follows: fifty percent (50%) of the fund shall be distributed equally among the ninety-five (95) counties of the state, and fifty percent (50%) of the balance shall be distributed among the ninety-five (95) counties on the basis of area and fifty percent (50%) on basis of population, as of the most recent federal census or by special census pursuant to § 9-16-101, and shall be paid over monthly by the commissioner of finance and administration to the various county trustees, to be used by the county highway authorities in the building, repairing and improvement of county roads and bridges or for the funding of mass transit systems; provided, that the county legislative body of any county may at any regular term, by resolution passed by a majority of the members composing the membership of the body, and spread upon the minutes of the body, direct the department of transportation to expend the county's pro rata share of the fund on county highways and bridges designated by resolutions passed from time to time by the county legislative body. In the event the department of transportation is directed to expend the county's pro rata share of the funds, by resolution conforming to the requirements of this subdivision (a)(1), but thereafter the county legislative body and the county highway department are unable to agree on a designation of the roads and bridges on which the funds are to be expended, then the department of transportation shall expend the funds on the county roads and bridges in the county designated by the commissioner. Nothing in this part shall affect the rights or duties now imposed by law on counties having a board of county commissioners in expending funds derived from taxes levied exclusively within and by the county.

(2) “Mass transit systems,” as used in this section, includes, but is not limited to, services also funded under § 18 of the federal Urban Mass Transportation Act of 1964, as amended, and administered by the department.

(b)

(1) The trustee of each and every county of the state to which any of this fund is allotted and paid shall receive one percent (1%) of the fund when the allotment for that county has been paid out, as compensation for receiving and disbursing the fund, to be collected and at the times and in the manner that compensation is paid to the trustee for receiving and paying out the general funds belonging to the county, except that when the funds have been turned over to the department of transportation to be expended on the county highways as provided in this section, the funds shall not be turned over to the trustee of the county by the commissioner of finance and administration or the department, but shall be kept and retained by the department and expended on the roads in the same way that this section and §§ 54-4-101 and 54-4-102 require it to be expended; and during the time the funds are retained and expended by the department, neither the department of transportation nor the trustee of the county to which they belong shall be entitled to any compensation out of the funds, but all of the funds shall be expended on or with relation to the public highways in the county.

(2) At any time after the expiration of twelve (12) months from the passage of any resolution by the county legislative body turning the funds over to the department of transportation to be expended on the roads of the county, the county legislative body of the county may, at any regular session of the county legislative body, by resolution adopted by a majority of all the members composing that body and spread on the minutes of the body, direct the department of transportation to turn back to the county all the funds in its hands belonging to the county, to be thereafter expended by the county highway authorities on its county roads, as provided for by this section and §§ 54-4-101 and 54-4-102; provided, that at any regular session of the county legislative body within the twelve-month period, the body may pass a resolution to take effect at the end of the twelve-month period.

(3) During the time the department of transportation is given the expenditure of the funds, it shall not be permitted to obligate this fund by contract or otherwise, beyond the amount of the funds reasonably expected to be received for three (3) months immediately following the contract or obligation, and in no event, beyond the period fixed in the recalling resolution for the return of the funds to the county.

(4) Upon receipt of a certified copy of the resolution, it shall be the duty of the department, within twenty (20) days after the receipt of the copy of the resolution, to pay out of the funds in its hands any unpaid indebtedness created by it due to be paid out of this fund, and to pay the balance of the funds in its hands over to the trustee of the county.

(5) Upon receipt of a certified copy of the resolution, it also shall be the duty of the state to thereafter pay over to the trustee of the county any and all funds allotted to that county from the gasoline tax that have not at that time been paid over to the department of transportation, or that may thereafter be allotted to the county.

(c) Any person vested by law with the authority to administer county highway and bridge funds shall furnish an official bond in the amount of one hundred thousand dollars ($100,000), or in a greater sum as the county legislative body may determine. The bond shall be prepared in accordance with title 8, chapter 19, approved by the county legislative body, recorded in the office of the county register of deeds, and transmitted to the office of the county clerk for safekeeping.

(d) Before distributing to the counties any of the revenues mentioned in this section, the commissioner of finance and administration shall make a monthly deduction from the revenues of twenty-eight thousand two hundred fifty dollars ($28,250), which sum, together with an appropriation per annum from the general fund of the state, shall be apportioned and transmitted to the University of Tennessee for use by the university in operating the county technical assistance service (CTAS) in its institute for public service (IPS) as provided by § 49-9-402.

(e) No more than twenty-two and twenty-two one hundredths percent (22.22%) of funds in the county aid fund may be expended for the purpose of funding mass transit.