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SENATE BILL 355
57
TH 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;
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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
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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
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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
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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
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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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