SENATE BILL 355
57th legislature - STATE OF NEW MEXICO - first session, 2025
INTRODUCED BY
Peter Wirth
AN ACT
RELATING TO APPROPRIATIONS; ENACTING THE PUBLIC FINANCE ACCOUNTABILITY ACT; ESTABLISHING FUNDING CRITERIA AND GRANT MANAGEMENT AND OVERSIGHT REQUIREMENTS; ENUMERATING DUTIES OF THE DEPARTMENT OF FINANCE AND ADMINISTRATION.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. [NEW MATERIAL] SHORT TITLE.--This act may be cited as the "Public Finance Accountability Act".
SECTION 2. [NEW MATERIAL] DEFINITIONS.--As used in the Public Finance Accountability Act:
A. "annual audit" means the annual audit or examination of the financial affairs of a grantee by an independent auditor required by the Audit Act;
B. "department" means the department of finance and administration;
C. "grant" means a non-exchange transaction whereby a state agency makes a capital outlay appropriation or other special purpose appropriation available to a grantee;
D. "grant agreement" means a written agreement pursuant to which a state agency grants a capital outlay appropriation or other special purpose appropriation to a grantee;
E. "grantee" means an entity to which a state agency grants a capital outlay appropriation or other special purpose appropriation;
F. "independent auditor" means a certified public accountant or chartered accountant who has been approved by the state auditor to examine financial records and transactions of a grantee to impartially and objectively determine compliance with generally accepted accounting principles and state laws and rules; and
G. "state agency" means any department, institution, board, bureau, commission, district or committee of state government.
SECTION 3. [NEW MATERIAL] FUNDING CRITERIA.--
A. The department shall establish the following funding criteria for a grantee to be eligible for a capital outlay appropriation or other special purpose appropriation to political subdivisions of the state:
(1) a grantee shall have completed an annual audit for one of the past two fiscal years and the most recently completed annual audit shall be a public record pursuant to the Audit Act;
(2) if a grantee's most recently completed annual audit documents material weaknesses or significant deficiencies:
(a) the grantee shall prepare an actionable plan to address the material weaknesses and significant deficiencies;
(b) the state agency making the grant shall provide support to the grantee to prepare and implement the grantee's plan to adequately address the material weaknesses and deficiencies; or
(c) if the grantee's prior year audit findings have repeated material weaknesses and deficiencies for more than two consecutive fiscal years from the fiscal year the grant is being considered, the state agency making the grant shall have determined that another appropriate entity is able and willing to act as fiscal agent for the grant;
(3) in the case of a grantee that is not required to have annual audits conducted pursuant to the Audit Act:
(a) the grantee shall have demonstrated to the satisfaction of the state agency making the grant that it has adequate accounting methods and procedures to manage and expend grant funds in accordance with applicable law and account for and safeguard grant funds and assets acquired by grant funds;
(b) the state agency shall have determined that it can impose and has the resources to implement special grant conditions that will adequately address any relevant deficiencies in the grantee's accounting methods and procedures; or
(c) the state agency shall have determined that another appropriate entity is able and willing to act as fiscal agent for the grant; and
(4) the grantee shall be in compliance with any financial reporting requirements, including those enumerated in the Audit Act, and shall have a budget for the current fiscal year approved by any applicable governing body or oversight agency.
B. The department shall require the funding criteria set forth in Subsection A of this section to be met prior to allowing a state agency to:
(1) certify to the state board of finance for the issuance of severance tax or general obligation bonds for a project; or
(2) make a grant to a grantee.
SECTION 4. [NEW MATERIAL] GRANT MANAGEMENT AND OVERSIGHT REQUIREMENTS.--The department shall establish grant management and oversight requirements that, at a minimum, require state agencies to:
A. ensure that sales, leases and licenses of capital assets acquired with capital outlay appropriations and special purpose appropriations granted to a grantee are approved in accordance with applicable law;
B. in the event no oversight agency is required to approve of a sale, lease or license of capital assets acquired with capital outlay appropriations and special purpose appropriations granted to a grantee, independently confirm that the disposition of capital assets complies with applicable law and that the grantee is receiving adequate consideration in exchange for the capital assets;
C. utilize the appropriate capital outlay grant agreement template developed by the department; and
D. conduct field audits of capital outlay projects, on a statistical or stratified basis, in accordance with procedures and policies prescribed by the department.
SECTION 5. [NEW MATERIAL] DUTIES OF THE DEPARTMENT.--The department shall:
A. prescribe procedures, policies and processing documents to implement the funding criteria and grant management requirements set forth in Sections 3 and 4 of the Public Finance Accountability Act;
B. prescribe one or more capital outlay grant agreement templates for use by state agencies;
C. develop criteria for granting requests for deviations from its grant agreement templates and grant management and oversight requirements; and
D. monitor and enforce state agencies' compliance with the funding criteria and grant management and oversight requirements of Sections 3 and 4 of the Public Finance Accountability Act.
SECTION 6. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2025.
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