We discuss the interplay between the nondynamic and dynamic electron correlation in excited states from the perspective of the suppression of dynamic correlation (SDC) and enhancement of dynamic correlation (EDC) effects. We reveal that there exists a connection between the ionic character of a wave function and EDC. Following this finding we introduce a quantitative measure of ionicity based solely on local functions without referring to valence bond models. The ability to recognize both the SDC and EDC regions underlies the presented method, named CASΠDFT, combining complete active space (CAS) wave function and density functional theory (DFT) via the on-top pair density (Π) function. We extend this approach to excited states by devising an improved representation of the EDC effect in the correlation functional. The generalized CASΠDFT uses different DFT functionals for ground and excited states. Numerical demonstration for singlet π → π* excitations shows that CASΠDFT offers satisfactory accuracy at a fraction of the cost of the ab initio approaches.