---
title: HB 1164. Education; require State Board of Education to appoint an audit committee
collection: bills
id: 2025-2026/hb1164
cite_as: HB 1164, 2025-2026 Regular Session (Ga.)
canonical_url: https://georgiacommons.org/bills/2025-2026/hb1164
md_url: https://georgiacommons.org/bills/2025-2026/hb1164.md
text_url: https://georgiacommons.org/bills/2025-2026/hb1164/text
source_url: https://www.legis.ga.gov/legislation/72768
date: 2026-05-12
status: passed
corpus_version: bills-2026-09-13
license: Public record of the Georgia General Assembly, via LegiScan; see about.md
publisher: Georgia Commons, an independent project of Georgia Civic Data. Not the State of Georgia. Not legal advice.
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omitted: votes and history
omitted_chars: 1015
omitted_url: https://georgiacommons.org/bills/2025-2026/hb1164.md?full=1
bill_number: HB 1164
session: 2025-2026 Regular Session
session_slug: 2025-2026
chamber: House
bill_type: bill
status_date: 2026-05-12
last_action: Effective Date 2026-07-01
sponsors:
  - Will Wade
  - James Hatchett
  - Jan Jones
  - Chris Erwin
  - Matthew Gambill
  - Kasey Carpenter
  - Billy Hickman
text_version: Enrolled
has_text: true
legiscan_url: https://legiscan.com/GA/bill/HB1164/2025
upstream_id: 2106730
summaries_model: claude-sonnet-5
topic_tags:
  - school district finances
  - education audits
  - school superintendent contracts
  - charter schools
  - state government oversight
---

# HB 1164. Education; require State Board of Education to appoint an audit committee

## Text

House Bill 1164 (AS PASSED HOUSE AND SENATE)
By: Representatives Wade of the 9th, Hatchett of the 155th, Jones of the 47th, Erwin of the
32nd, Gambill of the 15th, and others
A BILL TO BE ENTITLED
AN ACT
To amend Title 20 of the Official Code of Georgia Annotated, relating to education, so as to
require the State Board of Education to appoint an audit committee; to provide for minimum
responsibilities of such committee; to provide for such committee to request, receive, and
review reports; to provide additional criteria for the designation of local school systems and
state charter schools as high-risk or moderate-risk by the Department of Audits and
Accounts; to provide for reports of such designations to the Office of Student Achievement;
to require local school systems and state charter schools to annually certify compliance with
annual audit and reporting requirements and that they are not delinquent in certain required
payments; to provide for local school system and state charter school responses to the
Department of Education regarding financial irregularities or budget deficits; to revise
requirements for public notice of financial conditions of local school systems; to provide for
unilateral amendment or termination of performance contracts by the State Board of
Education under certain circumstances; to provide for limited contract extensions for local
school superintendents when his or her local school system is designated as a high-risk local
school system; to provide for additional reporting requirements by the Office of Student
Achievement; to expand the authority of the Office of Student Achievement to conduct
performance audits and reviews, including audits and reviews regarding the appropriateness
and impact of the use of waivers by schools and local school systems; to provide for
applicability; to make conforming changes; to amend Chapter 6 of Title 50 of the Official
Code of Georgia Annotated, relating to the Department of Audits and Accounts, so as to
revise provisions for financial audits of local school systems by and on behalf of the
Department of Audits and Accounts; to provide for such audits of state charter schools; to
require the Department of Audits and Accounts to develop and implement a program of
progressive monitoring, supports, and interventions to local school systems and state charter
schools; to provide for investigations of local school systems and state charter schools by the
state auditor; to provide for an effective date; to provide for related matters; to repeal
conflicting laws; and for other purposes.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION 1.
Title 20 of the Official Code of Georgia Annotated, relating to education, is amended in
Article 1 of Chapter 2, relating to the State Board of Education, by revising Code Section
20-2-6, relating to inspection committees, as follows:
"20-2-6.
<ins>(a)</ins> The State Board of Education is authorized to appoint committees composed of
members of the state board as a majority vote of the state board may determine to travel
within this state and inspect the institutions and facilities under its jurisdiction and control.
<ins>(b) The State Board of Education shall appoint an audit committee composed of members
of the state board. The audit committee shall meet no less than six times each fiscal year
and at the call of the chairperson or a majority of the members of such committee. The
state auditor or his or her designee from the Department of Audits and Accounts and a
representative of the State Charter Schools Commission shall be in attendance at such
meetings of the audit committee. The audit committee shall be responsible for, at a
minimum, reviewing reports on the fiscal conditions of local school systems, state charter
</ins>
<ins>schools, and completion special schools that are designated as high-risk or moderate-risk,
as provided for in Code Section 20-2-67, and assessing the financial conditions and risks
of the state's public education system by making routine examination of financial reporting,
internal controls, and adherence to state law and the policies, rules, and regulations of the
state board by the Department of Education, the State Charter Schools Commission, the
Department of Juvenile Justice, and the public schools of this state. The audit committee
shall be authorized to request, receive, and review audit reports and other reports from local
boards of education or other public school governing bodies, local school systems, local
school superintendents, the Office of Student Achievement, the State Charter Schools
Commission, the Department of Juvenile Justice, the Department of Audits and Accounts,
the Department of Community Health, or any state agency, board, or authority with
information relevant to the financial conditions and risks of the state's public education
system. No less than twice each fiscal year, the state health benefit plan, the Teachers
Retirement System of Georgia, and the Georgia Public School Employees Retirement
System shall provide to the audit committee a report of reconciled payments owed by each
local school system, state charter school, and completion special school that has not, for
any reason, timely remitted the full amount of any obligation for more than 120 days at any
time during the preceding 180 days. The audit committee shall forward such reports to the
Department of Audits and Accounts, the Office of Student Achievement, and the State
Charter Schools Commission."
</ins> SECTION 2.
Said title is further amended in Article 3 of Chapter 2, relating to local boards of education,
by revising Code Section 20-2-67, relating to local school system or school subject to
corrective action plan for budget deficit, financial operations form, publication, and mailing
to Department of Education and local governing body, as follows:
"20-2-67.
(a) <ins>As used in this Code section, the term:
(1) 'Local school system' means and includes local school systems and completion
special schools provided for in Article 31C of this chapter.
(2) 'State charter school' shall have the same meaning as set forth in Code
Section 20-2-2081.
(a.1)(1) Each local school system and state charter school shall:
(A) Provide for and cause to be made an annual audit report of the financial affairs and
transactions of all funds and activities of the local school system or state charter school
for each fiscal year in accordance with the provisions of Code Section 50-6-6; and
(B) By December 31 each year, submit to the Department of Audits and Accounts:
(i) An annual audit readiness certification attesting that audit readiness requirements
established by the Department of Audits and Accounts have been met; and
(ii) An annual certification attesting that such local school system or state charter
school is not delinquent in any required payments to:
(I) The state health benefit plan;
(II) The Teachers Retirement System of Georgia;
(III) The Georgia Public School Employees Retirement System; or
(IV) The Department of Labor.
(2) The certifications required under paragraph (1) of this subsection shall be signed by:
(A) For local school systems, the local school superintendent, the chief financial officer
or finance director, and the chairperson of the local board of education or other public
school governing body; and
(B) For state charter schools, the chief administrator, the chief financial officer or
finance director, and the chairperson of the governing body.
</ins>
<ins>(3) Any local school system or state charter school that does not comply with the
requirement of paragraphs (1) and (2) of this subsection shall be designated a high-risk
local school system or state charter school by the Department of Audits and Accounts.
(a.2)</ins> When an audit by the Department of Audits and Accounts finds and reports
irregularities or <del>budget</del> deficits in the fund accounting information regarding a local school
system, <del>or</del> a school within the local school system, <ins>or a state charter school, or when the
Department of Audits and Accounts finds significant indicators of fiscal concern regarding
a local school system or state charter school,</ins> the Department of Audits and Accounts shall
report <del>the</del> <ins>such</ins> findings <del>of irregularities or budget deficits</del> to the State Board of Education,
<ins>the Office of Student Achievement,</ins> and the local board of education <ins>or other governing
body.
(a.3)</ins> The Department of Audits and Accounts shall designate local school systems <ins>or state
charter schools</ins> that <del>have had reported irregularities or budget deficits for three or more
consecutive years</del> <ins>require Tier 3 or Tier 4 monitoring, supports, and interventions, as
provided for in Code Section 50-6-6.1,</ins> as high-risk local school systems <ins>or state charter
schools</ins> and shall designate local school systems <ins>and state charter schools</ins> that <del>have had
reported irregularities or budget deficits for one year or two consecutive years</del> <ins>require
Tier 2 monitoring, supports, and interventions, as provided for in Code Section 50-6-6.1,
</ins> as moderate-risk local school systems <ins>or state charter schools.
(a.4) Each local school system or state charter school that is designated a high-risk or
moderate-risk local school system or state charter school shall be audited by the
Department of Audits and Accounts, notwithstanding any provision of Code Section 50-6-6
to the contrary.
</ins> (b) The State Board of Education shall inform the superintendent of the local school
system <ins>or the chief administrator of the state charter school</ins> of <del>the irregularities or budget
deficits regarding a local school system's or a school's fund accounting information,
including</del> <ins>the findings of the Department of Audits and Accounts, as provided for in
</ins>
<ins>subsection (a.2) of this Code section, and</ins> if a local school system <ins>or state charter school
</ins> has been designated as a high-risk <del>local school system</del> or moderate-risk local school system
<ins>or state charter school.</ins> <del>The</del> <ins>Within 60 days of being designated as a high-risk or
moderate-risk local school system or state charter school, the local school</ins> superintendent
<ins>or state charter school chief administrator</ins> shall submit to the Department of Education, <ins>the
Department of Audits and Accounts, and the Office of Student Achievement</ins> a response to
the findings, <ins>and such response shall include any plan or other information required under
policies, rules, regulations, or guidance promulgated by the Department of Audits and
Accounts pursuant to Code Section 50-6-6 or 50-6-6.1</ins> and a corrective action plan
approved by the local board of education <del>at a board meeting within 120 days of receiving
notice of designation as a high-risk local school system or moderate-risk local school
system, as defined by rules and regulations adopted by the State Board of Education
designed to correct the financial irregularities or budget deficits for the school or school
system.</del> From the time <del>such irregularity or budget deficit is discovered until the time it is
eliminated</del> <ins>a local school system or state charter school is designated as a moderate-risk or
high-risk local school system or state charter school until such time as the local school
system or state charter school is under neither designation,</ins> the local school superintendent
<ins>or state charter school chief administrator</ins> shall present to each member of the local board
of education <ins>or other governing body</ins> for his or her review and written acknowledgment
a monthly report containing all anticipated expenditures by budget function for such school
or school system during the current month. The report shall be presented to <ins>members of
the</ins> local board <del>members</del> <ins>of education or other governing body</ins> on or before the tenth
business day of each month. Each monthly report shall be signed by each member of <del>that
</del> <ins>the</ins> local board <ins>of education or other governing body</ins> and recorded and retained in the
minutes of the meeting of the local board of education <ins>or other governing body.
</ins> (c) Not later than September 30 of the year, each local board of education <ins>or other
governing body</ins> shall cause to be published in the official county organ wherein the local
school system is located once a week for two weeks a statement of actual financial
operations for such schools or school system <del>identified by the Department of Audits and
Accounts as having financial irregularities</del> <ins>designated as a moderate-risk or high-risk local
school system by the Department of Audits and Accounts pursuant to subsection (a.3) of
this Code section.</ins> Such statement of actual financial operations shall be in a form to be
specified and prescribed by the state auditor for the purpose of indicating the current
financial status of the schools or school system. Prior to publication, such form shall be
executed by the local board of education <ins>or other governing body</ins> and signed by each
member of <del>said</del> <ins>such local</ins> board <ins>of education or other governing body</ins> and the local school
superintendent.
(d) A copy of the actual financial operations form required to be published by
subsection (c) of this Code section shall be mailed by each local board of education <ins>or
other governing body</ins> to the Department of Education and the local county board of
commissioners or local municipal governing authority. A current copy of said form shall
be maintained on file in the central administrative office of the local school system for
public inspection for a period of at least two years from the date of its publication. Copies
of the statement shall be made available on request."
SECTION 3.
Said title is further amended in Article 4 of Chapter 2, relating to increased flexibility for
local school systems, by revising subsection (c) of Code Section 20-2-83, relating to state
board approval of local school board flexibility contract, as follows:
"(c) The terms of the contract shall also include specific requirements relating to
maintaining or achieving financial stability of the local school system, including ensuring
that the local school system has not been designated as a high-risk local school system by
the Department of Audits and Accounts pursuant to Code Section 20-2-67, or if it has been
designated as a high-risk local school system, that it has a written corrective action plan in
place and that local school system board members and appropriate personnel participate
in required training to address the deficiencies. <ins>The terms of the contract shall also include
specific provisions authorizing the State Board of Education to unilaterally amend and
terminate the contract upon being notified by the Department of Audits and Accounts that
the local school system has been designated by the Department of Audits and Accounts as
a high-risk local school system."
</ins> SECTION 4.
Said title is further amended in Article 5 of Chapter 2, relating to local school
superintendents, by revising Code Section 20-2-101, relating to appointment of school
superintendents, as follows:
"20-2-101.
<ins>(a)(1) Except as provided in paragraph (2) of this subsection, each local school
superintendent</ins> <del>Superintendents of each school system</del> shall be employed by the local
board of education under written contracts for a term of not less than one year and not
more than three years. Any provision of any such contract which provides for an
extension of the duration of employment thereunder, whether automatic or contingent
upon the occurrence of one or more events, shall be void if that extension would result
in employment under the contract, as extended, for a period which exceeds three years.
<ins>(2) At any time a local school system is designated as a high-risk local school system by
the Department of Audits and Accounts pursuant to Code Section 20-2-67, the local
school superintendent's contract of employment shall not be extended for a term which
exceeds 12 months. Any such term which exceeds 12 months shall be void.
</ins> (b)(1) No person shall be eligible to be appointed, <del>or</del> employed, <ins>or to serve</ins> as <ins>a local
school</ins> superintendent <del>of schools of any county or independent school system</del> unless such
person is of good moral character, has never been convicted of any crime involving moral
turpitude, and possesses acceptable business or management experience as specified by
the Professional Standards Commission or the minimum valid certificate or a letter of
eligibility for said certificate required by the Professional Standards Commission.
(2) No person shall be eligible to be appointed, employed, or to serve as <ins>a local school
</ins> superintendent <del>of schools of any county or independent school system</del> who has an
immediate family member sitting on the local board of education for <del>such</del> <ins>the local</ins> school
system or who has an immediate family member hired as or promoted to a principal,
assistant principal, or system administrative staff on or after July 1, 2009, by <del>that</del> <ins>such
local</ins> school system. As used in this <del>subsection</del> <ins>paragraph,</ins> the term 'immediate family
member' means a spouse, child, sibling, or parent or the spouse of a child, sibling, or
parent whose term as a member of the local board of education or whose employment as
a principal, assistant principal, or system administrative staff in the local school system
began on or after January 1, 2010. Nothing in this <del>Code section</del> <ins>paragraph</ins> shall affect
the employment of any person who is employed by a local school system on or before
July 1, 2009, or who is employed by a local school system when an immediate family
member becomes the <ins>local school</ins> superintendent for <del>that</del> <ins>such local</ins> school system.
(c) <del>Superintendents</del> <ins>Local school superintendents</ins> shall have such additional qualifications
as may be prescribed by local law or policies of the local board <ins>of education</ins> <del>for that school
district,</del> not inconsistent with the provisions of this chapter.
(d) At any time during the 12 months immediately preceding the expiration of an
appointed <ins>local</ins> school superintendent's contract or term of office, or when a vacancy in the
office of <ins>local</ins> school superintendent occurs, the local board <ins>of education</ins> may appoint and
employ a successor <ins>local school superintendent</ins> in accordance with the above provisions
of this Code section, notwithstanding that the terms of some or all of the <ins>local</ins> board <ins>of
education</ins> members will expire before <del>the employment of the superintendent so appointed
and employed</del> <ins>such employment</ins> begins.
(e) A local school superintendent may concurrently serve as a principal, teacher, or in
another staff position as directed by the local board <ins>of education</ins> in its sole discretion and
in accordance with the terms of the contract between the <ins>local school</ins> superintendent and
the local board <ins>of education.</ins> A local school superintendent may also serve concurrently
as <ins>local school</ins> superintendent of one or more local school systems in accordance with the
terms of his or her respective contracts and upon approval by each affected local school
system.
(f) No substantive or procedural right regarding employment or termination of
employment of a <ins>local school</ins> superintendent by a local school system shall be created by
this Code section. Rather, the terms and conditions of employment of a <ins>local</ins> school
superintendent by a local school system shall be determined exclusively by the contract
between those parties and may include, without being limited to, the conditions under and
procedures by which <del>that</del> <ins>such</ins> contract may be terminated prior to the end of the term of
<del>that</del> <ins>such</ins> contract."
SECTION 5.
Said title is further amended in Article 31 of Chapter 2, the "Charter Schools Act of 1998,"
by revising subsection (c) of Code Section 20-2-2063.2, relating to charter systems, as
follows:
"(c) Prior to approval or denial of a charter petition for a charter system, the state board
shall receive and give all due consideration to the recommendation and input from the
Office of District Flexibility established in subsection (b) of Code Section 20-2-2069. The
state board shall approve the charter if the state board finds, after receiving input from the
Office of District Flexibility, that the petition complies with the rules, regulations, policies,
and procedures promulgated pursuant to Code Section 20-2-2063 and the provisions of this
title, is in the public interest, and promotes school level governance. A charter for a charter
system shall include the interventions, sanctions, and loss of governance consequences
contained in Code Section 20-14-41. A charter for a charter system shall require that the
local school system has not been designated as a high-risk local school system by the
Department of Audits and Accounts pursuant to Code Section 20-2-67, or if it has been
designated as a high-risk local school system, the charter shall require that the local school
system has a written corrective action plan in place and that local school system board
members and appropriate personnel participate in required training to address the
deficiencies. <ins>The charter for a charter system shall also include specific provisions
authorizing the State Board of Education to unilaterally amend and terminate the charter
upon being notified that the charter system has been designated by the Department of
Audits and Accounts as a high-risk state charter school."
</ins> SECTION 6.
Said title is further amended in Part 2 of Article 2 of Chapter 14, relating to the Office of
Student Achievement, by revising paragraph (2) of subsection (a) of Code Section 20-14-27,
relating to required reports and publication format, as follows:
"(2)(A) An annual report regarding elementary and secondary education shall be
submitted no later than December 1 of each year, commencing December 1, 2001. The
elementary and secondary education report shall be an evaluation of the progress made
on performance indicators identified and defined by the office and approved by the
alliance for all elementary and secondary education programs administered by the
Department of Education.
<ins>(B) The elementary and secondary education report shall include:
(i) The most recent individual school and local school system ratings provided for in
subsection (d) of Code Section 20-14-33;
(ii) Reports prepared by the office as provided for in subsection (a) of Code
Section 20-14-49.13; and
(iii) Results</ins> <del>The elementary and secondary education report shall include information
concerning results</del> of the state's investment in each public school and each public
school system;"
SECTION 7.
Said title is further amended in Part 3 of Article 2 of Chapter 14, relating to accountability
assessment, by revising Code Section 20-14-35, relating to office powers, on-site audits,
reporting findings and recommendations, and authorization of other school audits, as follows:
"20-14-35.
(a) The office may:
(1) Conduct on-site <ins>performance</ins> audits of any school at any time, subject to the approval
of the director;
(2) Raise or lower any performance rating as a result of the audit; <del>and
</del> (3) Review school fund accounting information and records to determine effective and
efficient expenditure of state funds as allocated; <ins>and
(4) Conduct on-site performance audits of or otherwise review the use and reporting of
any waivers authorized by law for use by any local education agency, as such term is
defined in Code Section 20-2-167.3, subject to the approval of the director. Such
performance audits and reviews shall include an evaluation of the use of waivers in
compliance with any applicable contract that authorizes the use of waivers by the local
education agency, student achievement trends during the current school year and
preceding three school years, and any evidence of misuse of waivers or reporting
irregularities.
</ins> (b) The director shall determine the frequency of on-site audits by the office according to
annual comprehensive analyses of student performance and equity in relation to the
academic excellence indicators and fund accounting assessments as adopted under
subsection (b) of Code Section 20-14-34.
(c) In making an on-site school performance audit, the auditor shall obtain information
from administrators, teachers, and parents of students enrolled in the local school system
<ins>or other public school.</ins> The audit may not be closed until information is obtained from each
of those sources. The office shall adopt rules regarding obtaining information from parents
and using that information in the auditor's report and obtaining information from teachers
in a manner that prevents a school or school system from screening the information.
(d) The auditors shall report to the local board of education, the local school council, and
appropriate school administrators and shall report findings and recommendations
concerning any necessary improvements or intervention strategies. <del>School</del> <ins>Performance
</ins> audit reports shall be provided to <del>the alliance and</del> the State Board of Education, <ins>except that
performance audit reports provided for under paragraph (4) of subsection (a) or
paragraph (3) of subsection (e) of this Code section shall also be provided to the
chairperson of the House Committee on Education, the chairperson of the Senate Education
and Youth Committee, the chairperson of the House Committee on Appropriations, and the
chairperson of the Senate Appropriations Committee and the Department of Audits and
Accounts and shall be posted on the website of the Office of Student Achievement.
</ins> (e) The director may authorize other <del>school</del> <ins>performance</ins> audits <ins>of any school</ins> to be
conducted under the following circumstances:
(1) When excessive numbers of absences of students eligible to be tested on state
assessment instruments are determined; <del>or
</del> (2) When a school or school system has not provided student performance information
to the Department of Education's educational information system as required under
subsection (b) of Code Section 20-2-167; <ins>or
(3) When a local school system is designated as a high-risk local school system by the
Department of Audits and Accounts pursuant to Code Section 20-2-67.
(f) Following the second and fourth years of each local school system's charter system
contract or strategic waivers school system contract, the office shall report to the State
Board of Education:
(1) Whether such local school system is designated as a high-risk local school system by
the Department of Audits and Accounts pursuant to Code Section 20-2-67; and
</ins>
<ins>(2) Which schools, if any, from such local school system are identified for
comprehensive or targeted support under the federal Elementary and Secondary
Education Act for having performed in the bottom 5 percent of Title I schools for three
years (CSI: Tier IV schools)."
</ins> SECTION 8.
Said title is further amended in Part 3B of Article 2 of Chapter 14, relating to financial
transparency in education, by revising subsection (c) of Code Section 20-14-49.11, relating
to financial information on websites, as follows:
"(c) Each local school system and each state charter school which maintains a website shall
post in a prominent location on its website a link to where the information listed in
subsections (a) and (b) of this Code section and the following information can be found on
the Department of Education's website:
(1) The annual budget submitted to the State Board of Education pursuant to
subsection (c) of Code Section 20-2-167;
(2) The annual personnel report prepared by the state auditor pursuant to Code Section
50-6-27;
(3) The most recent five years of audits conducted by the Department of Audits and
Accounts <ins>and any additional independent audits conducted</ins> pursuant to <del>subsection (a) of
</del> Code Section 50-6-6 <del>and any additional independent audits conducted pursuant to
subsection (b) of Code Section 50-6-6;
</del> (4) Any findings of irregularities, <del>or budget</del> deficits, <ins>or significant indicators of fiscal
concern regarding a local school system</ins> reported by the Department of Audits and
Accounts pursuant to Code Section 20-2-67; and
(5) For a local board of education which imposes a sales tax for educational purposes
pursuant to Part 2 of Article 3 of Chapter 8 of Title 48, the information required pursuant
to Code Section 48-8-141 as provided to the Department of Audits and Accounts for
posting on such department's searchable website pursuant to subsection (g) of Code
Section 50-6-32."
SECTION 9.
Said title is further amended in said part by revising Code Section 20-14-49.13, relating to
reporting of percentage of students with each state funded characteristic included in Code
Section 20-2-161, online sortable database, underlying fiscal data for financial efficiency
ratings, and inter-agency cooperation, as follows:
"20-14-49.13.
(a) The office shall report <del>the:
</del> <ins>(1) The</ins> percentage of students with each state funded characteristic included in Code
Section 20-2-161 at the local school system and school levels;
<ins>(2) The relative financial performance of local school systems and schools; and
(3) Each local school system that is designated as a high-risk school system or
moderate-risk school system as provided for in Code Section 20-2-67.
</ins> (b) The office shall create and publish an online sortable <del>data base</del> <ins>database</ins> for each local
school system and school on per student expenditures used to determine the financial
efficiency rating calculated by the office pursuant to Code Section 20-14-33 and as
delineated in Section 1111(h)(1)(C)(x) of the federal Elementary and Secondary Education
Act, as amended by the federal Every Student Succeeds Act.
(c) <del>The office shall report the relative financial performance of local school systems and
schools</del> <ins>Reserved.
</ins> (d) The Department of Education shall publish annually on its website all underlying fiscal
data that inform the financial efficiency rating calculated by the office pursuant to Code
Section 20-14-33 and an explanation of the fiscal data that inform the financial efficiency
rating on a disaggregated basis.
(e) All state and local government entities, including the Department of Education,
Department of Audits and Accounts, Office of Planning and Budget, the office, and local
school systems shall cooperate with and assist each other in complying with this part."
SECTION 10.
Chapter 6 of Title 50 of the Official Code of Georgia Annotated, relating to the Department
of Audits and Accounts, is amended by revising Code Section 50-6-6, relating to audit of
school and university systems, additional audits authorized, standards, and reports, as
follows:
"50-6-6.
(a) As used in this Code section, the term:
<ins>(1) 'Local school system' means and includes each local school system and each
completion special school, as provided for in Article 31C of this chapter, in this state.
(2) 'State charter school' shall have the same meaning as set forth in Code
Section 20-2-2081.
(a.1)</ins> It shall be the duty of the Department of Audits and Accounts <ins>to:
(1) Perform or cause to be performed an annual financial and compliance audit of
financial transactions and accounts of:
(A) Each local school system and state charter school; and</ins> <del>thoroughly to audit and
check the books and accounts of the county superintendents of schools and treasurers
of local school systems, of municipal systems, of the
</del> <ins>(B) The</ins> several units of the University System of Georgia, and of all other schools
receiving state aid; and <del>making
</del> <ins>(2) Issue in conjunction with each such audit required under paragraph (1) of this
subsection suitable reports that comply with state and federal rules and regulations for
such audits</ins> <del>regular and annual reports to the State School Superintendent, showing the
amount received, for what purpose received, and for what purposes expended.
</del>
<ins>(a.2) No state aid or public</ins> <del>All such</del> funds <ins>of any kind shall be</ins> held by <del>officials</del> <ins>any
official or employee of any local board of education or other public school governing body,
local school system, state charter school, institution of the University System of Georgia,
or any other school receiving state aid for any length of time in one or more of his or her
</ins> <del>must be kept in banks separate from their</del> individual bank accounts.
(b) Notwithstanding any other provisions of this chapter, <del>the local boards</del> <ins>each local board
</ins> of education <del>of the several county, independent, and area public school systems of this state
</del> <ins>or other public school governing body</ins> shall be authorized to have an additional audit made
of the <del>books, records, and accounts</del> <ins>financial affairs and transactions of all funds and
activities</ins> of the public <del>school system</del> <ins>schools</ins> over which any such board <ins>or governing body
</ins> has jurisdiction; <ins>provided, however, that such additional audit authorized under this
subsection shall not be relied upon by a local school system or state charter school in lieu
of the audit by the Department of Audits and Accounts required under subsection (a.1) of
this Code section, nor shall such additional audit be deemed to satisfy the requirements of
subsection (a.1) of this Code section, except as provided for in subsection (e) of this Code
section.</ins> <del>The local boards of education</del> <ins>Such boards and governing bodies</ins> shall be
authorized to employ certified public accountants of this state to make the <ins>additional</ins> audits
<ins>authorized under this subsection</ins> and to expend funds for <del>the</del> <ins>such</ins> audits which are received
by any such board <ins>or governing body</ins> for educational purposes. <ins>Each report of any audit
conducted as provided for in this subsection shall be completed and a copy of such report
shall be forwarded to the Department of Audits and Accounts within ten days of such
report being issued to the local school system.
</ins> (c) All audits <del>of such public school systems</del> <ins>provided for in subsections (a.1), (b), and (e)
of this Code section</ins> shall be conducted in <ins>accordance with generally accepted
governmental auditing standards over financial statements in conformity with generally
accepted accounting principles of governmental accounting and shall include tests of the
accounting records and other auditing procedures as considered necessary in the
</ins>
<ins>circumstances of such audit.</ins> <del>conformity with generally accepted standards and principles
of governmental accounting and auditing and</del> <ins>Such audits</ins> shall be subject to the standards,
rules, and ethics promulgated by the Georgia Society of Certified Public Accountants and
the American Institute of Certified Public Accountants. The <del>audit</del> report <ins>of each such audit
</ins> shall include the auditor's <del>unqualified</del> opinion upon the presentation of the financial
position and the results of the operations of the <del>public</del> <ins>local</ins> school system <ins>or state charter
school</ins> which is audited. <del>If the auditor is unable to express an unqualified opinion, he shall
so state and shall further detail the reasons for qualification or disclaimer of opinion
including recommendations necessary to make possible future unqualified opinions.
</del> <ins>(d) The Department of Audits and Accounts shall establish minimum audit readiness
requirements and audit scheduling priorities based on risk assessment, readiness, and
available resources. The Department of Audits and Accounts shall be authorized to delay
the commencement of an audit when minimum readiness requirements are not met.
Repeated failure to meet audit readiness requirements in a timely manner may be deemed
by the Department of Audits and Accounts to constitute a deficiency in internal control or
governance and may be reported as such in audit findings. The Department of Audits and
Accounts shall report chronic audit readiness failures to the State Board of Education and
the General Assembly.
(e)(1) The state auditor shall have discretionary authority to engage certified public
accountants of this state to perform audits required under subsection (a.1) of this Code
section and to authorize local school systems and state charter schools to engage certified
public accountants to perform audits required under subsection (a.1) of this Code section;
provided, however, that:
(A) Such certified public accountants shall comply with requirements set forth by the
Department of Audits and Accounts as it relates to scope, methodology, state
compliance procedures, and risk assessment;
</ins>
<ins>(B) No local school system or state charter school shall engage a certified public
accountant or any other person or organization to perform an audit required under
subsection (a.1) of this Code section without written authorization from the state
auditor; and
(C) No local school system or state charter school shall engage the same certified
public accountant or any other person or organization to both perform an audit required
under subsection (a.1) of this Code section and provide audit readiness services in
conjunction with the annual audit readiness certification required under
division (a.1)(1)(B)(i) of Code Section 20-2-67 without written authorization from the
state auditor. The state auditor shall provide such authorization only in exceptional
cases due to reasonable cost considerations or scarcity of locally available professional
service providers.
(2) The state auditor shall annually submit a written report to the State Board of
Education of the local school systems and state charter schools that were audited by
certified public accountants pursuant to this subsection.
(f) The Department of Audits and Accounts shall adopt rules, regulations, guidance, and
procedures necessary to implement this Code section."
</ins> SECTION 11.
Said chapter is further amended by adding a new Code section to read as follows:
<ins>"50-6-6.1.
(a) As used in this Code section, the term:
(1) 'Local school system' means and includes each local school system and each
completion special school, as provided for in Article 31C of this chapter, in this state.
(2) 'State charter school' shall have the same meaning as set forth in Code
Section 20-2-2081.
</ins>
<ins>(b) By July 1, 2026, the Department of Audits and Accounts shall develop and begin
implementing a program, the purpose of which is to:
(1) Monitor the fiscal condition of each local school system and state charter school in
this state;
(2) Provide progressive levels of monitoring, supports, and interventions to local school
systems and state charter schools, ranging from technical assistance and audit services
to significant interventions including strict compliance requirements; and
(3) Provide reports of the fiscal condition of local school systems and state charter
schools at appropriate intervals.
(c) The program shall consider indicators of fiscal concern, including, but not limited to:
(1) Revenue and fund balance indicators;
(2) Cash flow and liquidity indicators;
(3) Debt and obligations indicators;
(4) Pension and other post-employment benefits (OPEB);
(5) Budget and management indicators;
(6) Audit and compliance indicators;
(7) Enrollment and revenue base indicators;
(8) State compliance indicators;
(9) Fraud and criminal activity indicators; and
(10) Any other fiscal condition of the local school system or state charter school the state
auditor deems to have a detrimental effect on the local school system's or state charter
school's ability to continue providing required educational programs and services.
(d) The program shall include a graduated four-tiered framework for the assessment of the
fiscal conditions of each local school system or state charter school with an escalating
course of monitoring, supports, and interventions aligned with each tier, with the following
designations and descriptions:
</ins>
<ins>(1) Tier 1 - Fiscally Sound: a local school system or state charter school is showing no
signs of fiscal stress;
(2) Tier 2 - Fiscal Watch: a local school system or state charter school is showing signs
of fiscal stress and is required to comply with a state-approved corrective action and
fiscal recovery plan;
(3) Tier 3 - Fiscal Distress: a local school system or state charter school is required to
comply with a state-approved comprehensive fiscal plan to return the local school system
or state charter school to fiscal stability within a specified time frame; and
(4) Tier 4 - Critical Fiscal Emergency: a local school system or state charter school is
required to strictly comply with a state-approved intervention plan and shall not be
eligible to receive advance distributions of state allotted funds distributed under Article 6
of Chapter 2 of Title 20, the 'Quality Basic Education Act,' except as recommended by
the state auditor and approved by the State Board of Education.
(e)(1) Each local school system or state charter school determined by the state auditor
to require Tier 2 monitoring, supports, and interventions shall be deemed a 'moderate-risk
local school system' or a 'moderate-risk state charter school' as provided for in Code
Section 20-2-67.
(2) Each local school system and state charter school determined by the state auditor to
require Tier 3 or Tier 4 monitoring, supports, and interventions shall be deemed a
'high-risk local school system' or 'high-risk state charter school' as provided for in Code
Section 20-2-67.
(f) In collaboration with the State Board of Education, the Office of Student Achievement,
and the State Charter School Commission, the Department of Audits and Accounts shall
promulgate policies, rules, regulations, and guidance that provide for and specify with
detail:
(1) The conditions and indicators for each of the tiers provided for in subsection (d) of
this Code section;
</ins>
<ins>(2) The conditions under which a local school system or state charter school may move
from one such tier to another;
(3) The state-level monitoring, supports, and interventions to be made available to local
school systems or state charter schools at each tier; and
(4) When a strict compliance standard shall be applied to a local school system or state
charter school by the Department of Audits and Accounts or the State Board of Education
which shall include, but shall not be limited to, any intervention plan adopted by
resolution of the local board of education or other governing body of the local school
system as provided for in Code Section 20-2-166.
(g) The program required under this Code section shall be fully implemented by the
beginning of the 2028-2029 school year. The state auditor shall have discretionary
authority to prioritize which local school systems and state charter schools are the subject
of monitoring, supports, and intervention under such program; provided, however, that
such discretion is exercised on the basis of objective criteria provided in writing by the
state auditor to the State Board of Education; and provided, further, that, if the State Board
of Education or State School Superintendent refers a local school system or state charter
school for monitoring, supports, or interventions under such program, the state auditor shall
promptly evaluate and determine whether such local school system or state charter school
shall be the subject of monitoring, supports, and intervention under such program."
</ins> SECTION 12.
Said chapter is further amended by revising Code Section 50-6-28, relating to investigatory
duties generally, as follows:
"50-6-28.
<ins>(a)</ins> It shall be the duty of the state auditor to make an investigation as a part of his <ins>or her
</ins> audit of each and every department of the state government. When there are facts, records,
circumstances, or information that indicate mismanagement or misconduct on the part of
any official or employee of any department of the state government during either a past or
present administration, it shall be the duty of the state auditor to make the full investigation,
as provided in Code Section 50-6-29, of the department, official, or employee.
<ins>(b) The state auditor shall be authorized to make an investigation of any local school
system or state charter school, as such terms are defined in Code Section 50-6-6, in the
state. When there are facts, records, circumstances, or information that indicate
mismanagement or misconduct on the part of any official or employee of any local school
system or state charter school in the state during either a past or present administration, it
shall be the duty of the state auditor to make the full investigation, as provided in Code
Section 50-6-29, of the local school system, state charter school, official, or employee."
</ins> SECTION 13.
This Act shall become effective on July 1, 2026.
SECTION 14.
All laws and parts of laws in conflict with this Act are repealed.

## Summaries written by Georgia Commons

The following was written by claude-sonnet-5 from the text above and is not part of the bill. Quote the text, not the summary.

House Bill 1164 overhauls how Georgia monitors school district and charter school finances, creating a new state board audit committee and a tiered risk system with real consequences for districts flagged as fiscally troubled.

### Plain-language summary

Georgia currently relies on the Department of Audits and Accounts to flag local school systems that show financial irregularities or budget deficits, but the process for tracking and responding to those problems has been loosely defined. This bill requires the State Board of Education to create a standing audit committee that meets at least six times a year to review the financial health of school districts, charter schools, and completion special schools, with the state auditor and a State Charter Schools Commission representative attending.
The bill also builds a new four tier fiscal monitoring system (Tier 1 Fiscally Sound through Tier 4 Critical Fiscal Emergency) run by the Department of Audits and Accounts, replacing the old approach that judged risk mainly by how many years a district had reported irregularities. Districts and charter schools must certify annually that they are audit ready and current on payments to retirement systems and the Department of Labor, or be automatically labeled high risk. High risk districts face contract limits for superintendents, mandatory monthly financial reporting, public notice requirements, and possible unilateral State Board termination of flexibility contracts and charters. The Office of Student Achievement gains expanded audit powers, including reviewing waiver use. The law takes effect July 1, 2026, and the full monitoring program must be running by the 2028-2029 school year.

### What it does

- Requires the State Board of Education to appoint an audit committee of board members that meets at least six times a year to review school system finances.
- Creates a four tier fiscal risk framework (Fiscally Sound, Fiscal Watch, Fiscal Distress, Critical Fiscal Emergency) run by the Department of Audits and Accounts to replace the old irregularity-based risk labels.
- Requires local school systems and state charter schools to certify annually that they are audit ready and not delinquent on payments to retirement systems, the state health plan, or the Department of Labor, or be automatically designated high risk.
- Lets the State Board of Education unilaterally amend or terminate flexibility contracts and charters if a district or charter school is designated high risk by the Department of Audits and Accounts.
- Limits a local school superintendent's contract to 12 months if their district is designated high risk, instead of the normal one to three year term.
- Expands the Office of Student Achievement's authority to conduct performance audits, including audits of how schools and districts use waivers from state requirements.

### Who it affects

Local school district superintendents and school board members, state charter school administrators and governing boards, the Department of Audits and Accounts, the State Board of Education, the Office of Student Achievement, the State Charter Schools Commission, and taxpayers and parents in districts flagged as financially at risk.

### Why it matters

Districts and charter schools that fall behind on required payments or audit readiness would face closer state oversight, public financial disclosure, shorter superintendent contracts, and the possibility that the state cancels their flexibility contracts or charters. This changes how quickly and visibly financial trouble in a school system gets addressed.

### Key provisions

- Section 1 requires the State Board of Education to appoint an audit committee that reviews fiscal condition reports for high-risk and moderate-risk districts and charter schools at least six times a year.
- Section 2 rewrites O.C.G.A. § 20-2-67 to require annual audit readiness and payment delinquency certifications, and to base high-risk or moderate-risk designation on the new tiered monitoring system rather than years of reported irregularities.
- Section 3 and Section 5 add language letting the State Board of Education unilaterally amend or terminate flexibility contracts (O.C.G.A. § 20-2-83) and charter system charters (O.C.G.A. § 20-2-2063.2) once a district or charter school is designated high risk.
- Section 4 caps a local school superintendent's contract at 12 months while their district is designated high risk under O.C.G.A. § 20-2-101.
- Section 7 expands the Office of Student Achievement's power under O.C.G.A. § 20-14-35 to run on-site performance audits, including reviews of how schools use waivers, with some reports sent to legislative committee chairs.
- Section 10 rewrites O.C.G.A. § 50-6-6 to set annual financial and compliance audit requirements for local school systems and state charter schools and new rules for using outside certified public accountants.
- Section 11 adds a new O.C.G.A. § 50-6-6.1 requiring the Department of Audits and Accounts to build a four-tier fiscal monitoring program, fully implemented by the 2028-2029 school year.
- Section 13 sets the effective date of the Act as July 1, 2026.

## Status

- Status: Passed (2026-05-12)
- Last action: Effective Date 2026-07-01 (2026-05-12)
- Sponsors: Will Wade, James Hatchett, Jan Jones, Chris Erwin, Matthew Gambill, Kasey Carpenter, Billy Hickman
- Official page: https://www.legis.ga.gov/legislation/72768

> The history, votes, and amendments (1,015 characters) are at https://georgiacommons.org/bills/2025-2026/hb1164.md?full=1