HB1164: HB1164 Education; require State Board of Education to appoint an audit committee

26 LC 49 2695S/AP House Bill 1164 (AS PASSED HOUSE AND SENATE) By: Representatives Wade of the 9 th, Hatchett of the 155 th, Jones of the 47 th, 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 to1 require the State Board of Education to appoint an audit committee; to provide for minimum2 responsibilities of such committee; to provide for such committ ee to request, receive, and3 review reports; to provide additional criteria for the designation of local school systems and4 state charter schools as high-risk or moderate-risk by the Depa rtment of Audits and5 Accounts; to provide for reports of such designations to the Office of Student Achievement;6 to require local school systems and state charter schools to annually certify compliance with7 annual audit and reporting requirements and that they are not delinquent in certain required8 payments; to provide for local school system and state charter school responses to the9 Department of Education regarding financial irregularities or b udget deficits; to revise10 requirements for public notice of financial conditions of local school systems; to provide for11 unilateral amendment or termination of performance contracts by the State Board of12 Education under certain circumstances; to provide for limited contract extensions for local13 school superintendents when his or her local school system is designated as a high-risk local14 school system; to provide for additional reporting requirements by the Office of Student15 Achievement; to expand the authority of the Office of Student A chievement to conduct16 performance audits and reviews, including audits and reviews regarding the appropriateness17 and impact of the use of waivers by schools and local school sy stems; to provide for18 H. B. 1164 - 1 - 26 LC 49 2695S/AP applicability; to make conforming changes; to amend Chapter 6 o f Title 50 of the Official19 Code of Georgia Annotated, relating to the Department of Audits and Accounts, so as to20 revise provisions for financial audits of local school systems by and on behalf of the21 Department of Audits and Accounts; to provide for such audits of state charter schools; to22 require the Department of Audits and Accounts to develop and im plement a program of23 progressive monitoring, supports, and interventions to local school systems and state charter24 schools; to provide for investigations of local school systems and state charter schools by the25 state auditor; to provide for an effective date; to provide for related matters; to repeal26 conflicting laws; and for other purposes.27 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:28 SECTION 1.29 Title 20 of the Official Code of Georgia Annotated, relating to education, is amended in30 Article 1 of Chapter 2, relating to the State Board of Educatio n, by revising Code Section31 20-2-6, relating to inspection committees, as follows:32 "20-2-6.33 (a) The State Board of Education is authorized to appoint committ ees composed of34 members of the state board as a majority vote of the state boar d may determine to travel35 within this state and inspect the institutions and facilities under its jurisdiction and control.36 (b) The State Board of Education shall appoint an audit committee composed of members37 of the state board. The audit committee shall meet no less than six times each fiscal year38 and at the call of the chairperson or a majority of the members of such committee. The39 state auditor or his or her designee from the Department of Aud its and Accounts and a40 representative of the State Charter Schools Commission shall be in attendance at such41 meetings of the audit committee. The audit committee shall be responsible for, at a42 minimum, reviewing reports on the fiscal conditions of local school systems, state charter43 H. B. 1164 - 2 - 26 LC 49 2695S/AP schools, and completion special schools that are designated as high-risk or moderate-risk,44 as provided for in Code Section 20-2-67, and assessing the financial conditions and risks45 of the state's public education system by making routine examination of financial reporting,46 internal controls, and adherence to state law and the policies, rules, and regulations of the47 state board by the Department of Education, the State Charter S chools Commission, the48 Department of Juvenile Justice, and the public schools of this state. The audit committee49 shall be authorized to request, receive, and review audit reports and other reports from local50 boards of education or other public school governing bodies, lo cal school systems, local51 school superintendents, the Office of Student Achievement, the State Charter Schools52 Commission, the Department of Juvenile Justice, the Department of Audits and Accounts,53 the Department of Community Health, or any state agency, board, or authority with54 information relevant to the financial conditions and risks of t he state's public education55 system. No less than twice each fiscal year, the state health benefit plan, the Teachers56 Retirement System of Georgia, and the Georgia Public School Emp loyees Retirement57 System shall provide to the audit committee a report of reconciled payments owed by each58 local school system, state charter school, and completion speci al school that has not, for59 any reason, timely remitted the full amount of any obligation for more than 120 days at any60 time during the preceding 180 days. The audit committee shall forward such reports to the61 Department of Audits and Accounts, the Office of Student Achiev ement, and the State62 Charter Schools Commission."63 SECTION 2.64 Said title is further amended in Article 3 of Chapter 2, relating to local boards of education,65 by revising Code Section 20-2-67, relating to local school syst em or school subject to66 corrective action plan for budget deficit, financial operations form, publication, and mailing67 to Department of Education and local governing body, as follows:68 H. B. 1164 - 3 - 26 LC 49 2695S/AP "20-2-67.69 (a) As used in this Code section, the term:70 (1) 'Local school system' means and includes local school syst ems and completion71 special schools provided for in Article 31C of this chapter.72 (2) 'State charter school' shall have the same meaning as set forth in Code73 Section 20-2-2081.74 (a.1)(1) Each local school system and state charter school shall:75 (A) Provide for and cause to be made an annual audit report of the financial affairs and76 transactions of all funds and activities of the local school system or state charter school77 for each fiscal year in accordance with the provisions of Code Section 50-6-6; and78 (B) By December 31 each year, submit to the Department of Audits and Accounts:79 (i) An annual audit readiness certification attesting that audit readiness requirements80 established by the Department of Audits and Accounts have been met; and81 (ii) An annual certification attesting that such local school system or state charter82 school is not delinquent in any required payments to:83 (I) The state health benefit plan;84 (II) The Teachers Retirement System of Georgia;85 (III) The Georgia Public School Employees Retirement System; or86 (IV) The Department of Labor.87 (2) The certifications required under paragraph (1) of this subsection shall be signed by:88 (A) For local school systems, the local school superintendent, the chief financial officer89 or finance director, and the chairperson of the local board of education or other public90 school governing body; and91 (B) For state charter schools, the chief administrator, the ch ief financial officer or92 finance director, and the chairperson of the governing body.93 H. B. 1164 - 4 - 26 LC 49 2695S/AP (3) Any local school system or state charter school that does not comply with the94 requirement of paragraphs (1) and (2) of this subsection shall be designated a high-risk95 local school system or state charter school by the Department of Audits and Accounts.96 (a.2) When an audit by the Department of Audits and Accounts finds and reports97 irregularities or budget deficits in the fund accounting information regarding a local school98 system, or a school within the local school system, or a state charter school, or when the99 Department of Audits and Accounts finds significant indicators of fiscal concern regarding100 a local school system or state charter school, the Department of Audits and Accounts shall101 report the such findings of irregularities or budget deficits to the State Board of Education,102 the Office of Student Achievement, and the local board of education or other governing103 body.104 (a.3) The Department of Audits and Accounts shall designate local school systems or state105 charter schools that have had reported irregularities or budget deficits for t hree or more106 consecutive years require Tier 3 or Tier 4 monitoring, supports, and interventio ns, as107 provided for in Code Section 50-6-6.1, as high-risk local school systems or state charter108 schools and shall designate local school systems and state charter sch ools that have had109 reported irregularities or budget deficits for one year or two consecutive years require110 Tier 2 monitoring, supports, and interventions, as provided for in Code Section 50-6-6.1,111 as moderate-risk local school systems or state charter schools.112 (a.4) Each local school system or state charter school that is designated a high-risk or113 moderate-risk local school system or state charter school shall be audited by the114 Department of Audits and Accounts, notwithstanding any provision of Code Section 50-6-6115 to the contrary.116 (b) The State Board of Education shall inform the superintende nt of the local school117 system or the chief administrator of the state charter school of the irregularities or budget118 deficits regarding a local school system's or a school's fund a ccounting information,119 including the findings of the Department of Audits and Accounts, as prov i d e d f o r i n120 H. B. 1164 - 5 - 26 LC 49 2695S/AP subsection (a.2) of this Code section, and if a local school system or state charter school121 has been designated as a high-risk local school system or moderate-risk local school system122 or state charter school . T h e Within 60 days of being designated as a high-risk or123 moderate-risk local school system or state charter school, the local school superintendent124 or state charter school chief administrator shall submit to the Department of Education, the125 Department of Audits and Accounts, and the Office of Student Achievement a response to126 the findings, and such response shall include any plan or other information required under127 policies, rules, regulations, or guidance promulgated by the De partment of Audits and128 Accounts pursuant to Code Section 50-6-6 or 50-6-6.1 and a corrective action plan129 approved by the local board of education at a board meeting within 120 days of receiving130 notice of designation as a high-risk local school system or mod erate-risk local school131 system, as defined by rules and regulations adopted by the Stat e Board of Education132 designed to correct the financial irregularities or budget defi cits for the school or school133 system. From the time such irregularity or budget deficit is discovered until the time it is134 eliminated a local school system or state charter school is designated as a moderate-risk or135 high-risk local school system or state charter school until suc h time as the local school136 system or state charter school is under neither designation, the local school superintendent137 or state charter school chief administrator shall present to each member of the local board138 of education or other governing body for his or her review and written acknowledgment139 a monthly report containing all anticipated expenditures by budget function for such school140 or school system during the current month. The report shall be presented to members of141 the local board members of education or other governing body on or before the tenth142 business day of each month. Each monthly report shall be signed by each member of that143 the local board of education or other governing body and recorded and retained in the144 minutes of the meeting of the local board of education or other governing body.145 (c) Not later than September 30 of the year, each local board of education or other146 governing body shall cause to be published in the official county organ wherein the local147 H. B. 1164 - 6 - 26 LC 49 2695S/AP school system is located once a week for two weeks a statement of actual financial148 operations for such schools or school system identified by the Department of Audits and149 Accounts as having financial irregularities designated as a moderate-risk or high-risk local150 school system by the Department of Audits and Accounts pursuant to subsection (a.3) of151 this Code section. Such statement of actual financial operations shall be in a form to be152 specified and prescribed by the state auditor for the purpose o f indicating the current153 financial status of the schools or school system. Prior to pub lication, such form shall be154 executed by the local board of education or other governing bod y and signed by each155 member of said such local board of education or other governing body and the local school156 superintendent.157 (d) A copy of the actual financial operations form required to be published by158 subsection (c) of this Code section shall be mailed by each loc al board of education or159 other governing body to the Department of Education and the local county board of160 commissioners or local municipal governing authority. A current copy of said form shall161 be maintained on file in the central administrative office of t he local school system for162 public inspection for a period of at least two years from the date of its publication. Copies163 of the statement shall be made available on request."164 SECTION 3.165 Said title is further amended in Article 4 of Chapter 2, relati ng to increased flexibility for166 local school systems, by revising subsection (c) of Code Sectio n 20-2-83, relating to state167 board approval of local school board flexibility contract, as follows:168 "(c) The terms of the contract shall also include specific requ irements relating to169 maintaining or achieving financial stability of the local school system, including ensuring170 that the local school system has not been designated as a high-risk local school system by171 the Department of Audits and Accounts pursuant to Code Section 20-2-67, or if it has been172 designated as a high-risk local school system, that it has a written corrective action plan in173 H. B. 1164 - 7 - 26 LC 49 2695S/AP place and that local school system board members and appropriat e personnel participate174 in required training to address the deficiencies. The terms of the contract shall also include175 specific provisions authorizing the State Board of Education to unilaterally amend and176 terminate the contract upon being notified by the Department of Audits and Accounts that177 the local school system has been designated by the Department of Audits and Accounts as178 a high-risk local school system."179 SECTION 4.180 Said title is further amended in Article 5 of Chapter 2, relati ng to local school181 superintendents, by revising Code Section 20-2-101, relating to appointment of school182 superintendents, as follows:183 "20-2-101.184 (a)(1) Except as provided in paragraph (2) of this subsection, each local school185 superintendent Superintendents of each school system shall be employed by the local186 board of education under written contracts for a term of not le ss than one year and not187 more than three years. Any provision of any such contract whic h provides for an188 extension of the duration of employment thereunder, whether aut omatic or contingent189 upon the occurrence of one or more events, shall be void if that extension would result190 in employment under the contract, as extended, for a period which exceeds three years.191 (2) At any time a local school system is designated as a high-risk local school system by192 the Department of Audits and Accounts pursuant to Code Section 20-2-67, the local193 school superintendent's contract of employment shall not be extended for a term which194 exceeds 12 months. Any such term which exceeds 12 months shall be void.195 (b)(1) No person shall be eligible to be appointed, or employed, or to serve as a local196 school superintendent of schools of any county or independent school system unless such197 person is of good moral character, has never been convicted of any crime involving moral198 turpitude, and possesses acceptable business or management experience as specified by199 H. B. 1164 - 8 - 26 LC 49 2695S/AP the Professional Standards Commission or the minimum valid cert ificate or a letter of200 eligibility for said certificate required by the Professional Standards Commission.201 (2) No person shall be eligible to be appointed, employed, or to serve as a local school202 superintendent of schools of any county or independent school s ystem who has an203 immediate family member sitting on the local board of education for such the local school204 system or who has an immediate family member hired as or promot ed to a principal,205 assistant principal, or system administrative staff on or after July 1, 2009, by that such206 local school system. As used in this subsection paragraph, the term 'immediate family207 member' means a spouse, child, sibling, or parent or the spouse of a child, sibling, or208 parent whose term as a member of the local board of education or whose employment as209 a principal, assistant principal, or system administrative staff in the local school system210 began on or after January 1, 2010. Nothing in this Code section paragraph shall affect211 the employment of any person who is employed by a local school system on or before212 July 1, 2009, or who is employed by a local school system when an immediate family213 member becomes the local school superintendent for that such local school system.214 (c) Superintendents Local school superintendents shall have such additional qualifications215 as may be prescribed by local law or policies of the local board of education for that school216 district, not inconsistent with the provisions of this chapter.217 (d) At any time during the 12 months immediately preceding the expiration of an218 appointed local school superintendent's contract or term of office, or when a vacancy in the219 office of local school superintendent occurs, the local board of education may appoint and220 employ a successor local school superintendent in accordance with the above provisions221 of this Code section, notwithstanding that the terms of some or all of the local board of222 education members will expire before the employment of the superintendent so appointed223 and employed such employment begins.224 (e) A local school superintendent may concurrently serve as a principal, teacher, or in225 another staff position as directed by the local board of education in its sole discretion and226 H. B. 1164 - 9 - 26 LC 49 2695S/AP in accordance with the terms of the contract between the local school superintendent and227 the local board of education. A local school superintendent may also serve concurrently228 as local school superintendent of one or more local school systems in accordance with the229 terms of his or her respective contracts and upon approval by e ach affected local school230 system.231 (f) No substantive or procedural right regarding employment or termination of232 employment of a local school superintendent by a local school system shall be created by233 this Code section. Rather, the terms and conditions of employm ent of a local school234 superintendent by a local school system shall be determined exc lusively by the contract235 between those parties and may include, without being limited to, the conditions under and236 procedures by which that such contract may be terminated prior to the end of the term of237 that such contract."238 SECTION 5.239 Said title is further amended in Article 31 of Chapter 2, the "Charter Schools Act of 1998,"240 by revising subsection (c) of Code Section 20-2-2063.2, relatin g to charter systems, as241 follows:242 "(c) Prior to approval or denial of a charter petition for a ch arter system, the state board243 shall receive and give all due consideration to the recommendat ion and input from the244 Office of District Flexibility established in subsection (b) of Code Section 20-2-2069. The245 state board shall approve the charter if the state board finds, after receiving input from the246 Office of District Flexibility, that the petition complies with the rules, regulations, policies,247 and procedures promulgated pursuant to Code Section 20-2-2063 and the provisions of this248 title, is in the public interest, and promotes school level governance. A charter for a charter249 system shall include the interventions, sanctions, and loss of governance consequences250 contained in Code Section 20-14-41. A charter for a charter system shall require that the251 local school system has not been designated as a high-risk loca l school system by the252 H. B. 1164 - 10 - 26 LC 49 2695S/AP Department of Audits and Accounts pursuant to Code Section 20-2 -67, or if it has been253 designated as a high-risk local school system, the charter shall require that the local school254 system has a written corrective action plan in place and that l ocal school system board255 members and appropriate personnel participate in required train ing to address the256 deficiencies. The charter for a charter system shall also incl ude specific provisions257 authorizing the State Board of Education to unilaterally amend and terminate the charter258 upon being notified that the charter system has been designated by the Department of259 Audits and Accounts as a high-risk state charter school."260 SECTION 6.261 Said title is further amended in Part 2 of Article 2 of Chapter 14, relating to the Office of262 Student Achievement, by revising paragraph (2) of subsection (a) of Code Section 20-14-27,263 relating to required reports and publication format, as follows:264 "(2)(A) An annual report regarding elementary and secondary education shall be265 submitted no later than December 1 of each year, commencing December 1, 2001. The266 elementary and secondary education report shall be an evaluation of the progress made267 on performance indicators identified and defined by the office and approved by the268 alliance for all elementary and secondary education programs ad ministered by the269 Department of Education.270 (B) The elementary and secondary education report shall include:271 (i) The most recent individual school and local school system ratings provided for in272 subsection (d) of Code Section 20-14-33;273 (ii) Reports prepared by the office as provided for in subsect ion (a) of Code274 Section 20-14-49.13; and275 (iii) Results The elementary and secondary education report shall include information276 concerning results of the state's investment in each public school and each publi c277 school system;"278 H. B. 1164 - 11 - 26 LC 49 2695S/AP SECTION 7.279 Said title is further amended in Part 3 of Article 2 of Chapter 14, relating to accountability280 assessment, by revising Code Section 20-14-35, relating to offi ce powers, on-site audits,281 reporting findings and recommendations, and authorization of other school audits, as follows:282 "20-14-35.283 (a) The office may:284 (1) Conduct on-site performance audits of any school at any time, subject to the approval285 of the director;286 (2) Raise or lower any performance rating as a result of the audit; and287 (3) Review school fund accounting information and records to determine effective and288 efficient expenditure of state funds as allocated; and289 (4) Conduct on-site performance audits of or otherwise review the use and reporting of290 any waivers authorized by law for use by any local education ag ency, as such term is291 defined in Code Section 20-2-167.3, subject to the approval of the director. Such292 performance audits and reviews shall include an evaluation of t he use of waivers in293 compliance with any applicable contract that authorizes the use of waivers by the local294 education agency, student achievement trends during the current school year and295 preceding three school years, and any evidence of misuse of wai vers or reporting296 irregularities.297 (b) The director shall determine the frequency of on-site audits by the office according to298 annual comprehensive analyses of student performance and equity in relation to the299 academic excellence indicators and fund accounting assessments as adopted under300 subsection (b) of Code Section 20-14-34.301 (c) In making an on-site school performance audit, the auditor shall obtain information302 from administrators, teachers, and parents of students enrolled in the local school system303 or other public school. The audit may not be closed until information is obtained from each304 of those sources. The office shall adopt rules regarding obtaining information from parents305 H. B. 1164 - 12 - 26 LC 49 2695S/AP and using that information in the auditor's report and obtaining information from teachers306 in a manner that prevents a school or school system from screening the information.307 (d) The auditors shall report to the local board of education, the local school council, and308 appropriate school administrators and shall report findings and recommendations309 concerning any necessary improvements or intervention strategies. School Performance310 audit reports shall be provided to the alliance and the State Board of Education, except that311 performance audit reports provided for under paragraph (4) of s ubsection (a) or312 paragraph (3) of subsection (e) of this Code section shall also be provided to the313 chairperson of the House Committee on Education, the chairperson of the Senate Education314 and Youth Committee, the chairperson of the House Committee on Appropriations, and the315 chairperson of the Senate Appropriations Committee and the Depa rtment of Audits and316 Accounts and shall be posted on the website of the Office of Student Achievement.317 (e) The director may authorize other school performance audits of any school to be318 conducted under the following circumstances:319 (1) When excessive numbers of absences of students eligible to be tested on state320 assessment instruments are determined; or321 (2) When a school or school system has not provided student performance information322 to the Department of Education's educational information system as required under323 subsection (b) of Code Section 20-2-167; or324 (3) When a local school system is designated as a high-risk local school system by the325 Department of Audits and Accounts pursuant to Code Section 20-2-67.326 (f) Following the second and fourth years of each local school system's charter system327 contract or strategic waivers school system contract, the offic e shall report to the State328 Board of Education:329 (1) Whether such local school system is designated as a high-risk local school system by330 the Department of Audits and Accounts pursuant to Code Section 20-2-67; and331 H. B. 1164 - 13 - 26 LC 49 2695S/AP (2) Which schools, if any, from such local school system are i dentified for332 comprehensive or targeted support under the federal Elementary and Secondary333 Education Act for having performed in the bottom 5 percent of Title I schools for three334 years (CSI: Tier IV schools)."335 SECTION 8.336 Said title is further amended in Part 3B of Article 2 of Chapte r 14, relating to financial337 transparency in education, by revising subsection (c) of Code Section 20-14-49.11, relating338 to financial information on websites, as follows:339 "(c) Each local school system and each state charter school which maintains a website shall340 post in a prominent location on its website a link to where the information listed in341 subsections (a) and (b) of this Code section and the following information can be found on342 the Department of Education's website:343 (1) The annual budget submitted to the State Board of Educatio n pursuant to344 subsection (c) of Code Section 20-2-167;345 (2) The annual personnel report prepared by the state auditor pursuant to Code Section346 50-6-27;347 (3) The most recent five years of audits conducted by the Depa rtment of Audits and348 Accounts and any additional independent audits conducted pursuant to subsection (a) of349 Code Section 50-6-6 and any additional independent audits condu cted pursuant to350 subsection (b) of Code Section 50-6-6;351 (4) Any findings of irregularities, or budget deficits, or significant indicators of fiscal352 concern regarding a local school system reported by the Department of Audits and353 Accounts pursuant to Code Section 20-2-67; and354 (5) For a local board of education which imposes a sales tax f or educational purposes355 pursuant to Part 2 of Article 3 of Chapter 8 of Title 48, the information required pursuant356 to Code Section 48-8-141 as provided to the Department of Audit s and Accounts for357 H. B. 1164 - 14 - 26 LC 49 2695S/AP posting on such department's searchable website pursuant to sub section (g) of Code358 Section 50-6-32."359 SECTION 9.360 Said title is further amended in said part by revising Code Section 20-14-49.13, relating to361 reporting of percentage of students with each state funded char acteristic included in Code362 Section 20-2-161, online sortable database, underlying fiscal d ata for financial efficiency363 ratings, and inter-agency cooperation, as follows:364 "20-14-49.13.365 (a) The office shall report the:366 (1) The percentage of students with each state funded characteristic i ncluded in Code367 Section 20-2-161 at the local school system and school levels;368 (2) The relative financial performance of local school systems and schools; and369 ( 3 ) E a c h l o c a l s c h o o l s y s t e m t h a t i s d e s i g n a t e d a s a h i g h - r i s k school system or370 moderate-risk school system as provided for in Code Section 20-2-67.371 (b) The office shall create and publish an online sortable data base database for each local372 school system and school on per student expenditures used to de termine the financial373 efficiency rating calculated by the office pursuant to Code Sec tion 20-14-33 and as374 delineated in Section 1111(h)(1)(C)(x) of the federal Elementary and Secondary Education375 Act, as amended by the federal Every Student Succeeds Act.376 (c) The office shall report the relative financial performance of local school systems and377 schools Reserved.378 (d) The Department of Education shall publish annually on its website all underlying fiscal379 data that inform the financial efficiency rating calculated by the office pursuant to Code380 Section 20-14-33 and an explanation of the fiscal data that inform the financial efficiency381 rating on a disaggregated basis.382 H. B. 1164 - 15 - 26 LC 49 2695S/AP (e) All state and local government entities, including the Dep artment of Education,383 Department of Audits and Accounts, Office of Planning and Budget, the office, and local384 school systems shall cooperate with and assist each other in complying with this part."385 SECTION 10.386 Chapter 6 of Title 50 of the Official Code of Georgia Annotated, relating to the Department387 of Audits and Accounts, is amended by revising Code Section 50- 6-6, relating to audit of388 school and university systems, additional audits authorized, st andards, and reports, as389 follows:390 "50-6-6.391 (a) As used in this Code section, the term:392 (1) 'Local school system' means and includes each local school system and each393 completion special school, as provided for in Article 31C of this chapter, in this state.394 (2) 'State charter school' shall have the same meaning as set forth in Code395 Section 20-2-2081.396 (a.1) It shall be the duty of the Department of Audits and Accounts to:397 (1) Perform or cause to be performed an annual financial and c ompliance audit of398 financial transactions and accounts of:399 (A) Each local school system and state charter school; and thoroughly to audit and400 check the books and accounts of the county superintendents of schools and treasurers401 of local school systems, of municipal systems, of the402 (B) The several units of the University System of Georgia, and of all other schools403 receiving state aid; and making404 (2) Issue in conjunction with each such audit required under p aragraph (1) of this405 subsection suitable reports that comply with state and federal rules and regulations for406 such audits regular and annual reports to the State School Superintendent, showing the407 amount received, for what purpose received, and for what purposes expended.408 H. B. 1164 - 16 - 26 LC 49 2695S/AP (a.2) No state aid or public All such funds of any kind shall be held by officials any409 official or employee of any local board of education or other public school governing body,410 local school system, state charter school, institution of the University System of Georgia,411 or any other school receiving state aid for any length of time in one or more of his or her412 must be kept in banks separate from their individual bank accounts.413 (b) Notwithstanding any other provisions of this chapter, the local boards each local board414 of education of the several county, independent, and area public school systems of this state415 or other public school governing body shall be authorized to have an additional audit made416 of the books, records, and accounts financial affairs and transactions of all funds and417 activities of the public school system schools over which any such board or governing body418 has jurisdiction; provided, however, that such additional audit authorized under this419 subsection shall not be relied upon by a local school system or state charter school in lieu420 of the audit by the Department of Audits and Accounts required under subsection (a.1) of421 this Code section, nor shall such additional audit be deemed to satisfy the requirements of422 subsection (a.1) of this Code section, except as provided for in subsection (e) of this Code423 section. T h e l o c a l b o a r d s o f e d u c a t i o n Such boards and governing bodies shall be424 authorized to employ certified public accountants of this state to make the additional audits425 authorized under this subsection and to expend funds for the such audits which are received426 by any such board or governing body for educational purposes. Each report of any audit427 conducted as provided for in this subsection shall be completed and a copy of such report428 shall be forwarded to the Department of Audits and Accounts wit hin ten days of such429 report being issued to the local school system.430 (c) All audits of such public school systems provided for in subsections (a.1), (b), and (e)431 of this Code section shall be conducted in accordance with generally accepted432 governmental auditing standards over financial statements in co nformity with generally433 accepted accounting principles of governmental accounting and shall include tests of the434 accounting records and other auditing procedures as considered necessary in the435 H. B. 1164 - 17 - 26 LC 49 2695S/AP circumstances of such audit. conformity with generally accepted standards and principles436 of governmental accounting and auditing and Such audits shall be subject to the standards,437 rules, and ethics promulgated by the Georgia Society of Certified Public Accountants and438 the American Institute of Certified Public Accountants. The audit report of each such audit439 shall include the auditor's unqualified opinion upon the presentation of the financial440 position and the results of the operations of the public local school system or state charter441 school which is audited. If the auditor is unable to express an unqualified opinion, he shall442 so state and shall further detail the reasons for qualification or disclaimer of opinion443 including recommendations necessary to make possible future unqualified opinions.444 (d) The Department of Audits and Accounts shall establish mini mum audit readiness445 requirements and audit scheduling priorities based on risk asse ssment, readiness, and446 available resources. The Department of Audits and Accounts shall be authorized to delay447 the commencement of an audit when minimum readiness requirement s are not met. 448 Repeated failure to meet audit readiness requirements in a timely manner may be deemed449 by the Department of Audits and Accounts to constitute a deficiency in internal control or450 governance and may be reported as such in audit findings. The Department of Audits and451 Accounts shall report chronic audit readiness failures to the State Board of Education and452 the General Assembly.453 (e)(1) The state auditor shall have discretionary authority to engage certified public454 accountants of this state to perform audits required under subsection (a.1) of this Code455 section and to authorize local school systems and state charter schools to engage certified456 public accountants to perform audits required under subsection (a.1) of this Code section;457 provided, however, that:458 (A) Such certified public accountants shall comply with requirements set forth by the459 Department of Audits and Accounts as it relates to scope, metho dology, state460 compliance procedures, and risk assessment;461 H. B. 1164 - 18 - 26 LC 49 2695S/AP (B) No local school system or state charter school shall engag e a certified public462 accountant or any other person or organization to perform an au dit required under463 subsection (a.1) of this Code section without written authoriza tion from the state464 auditor; and465 (C) No local school system or state charter school shall engag e the same certified466 public accountant or any other person or organization to both perform an audit required467 under subsection (a.1) of this Code section and provide audit r eadiness services in468 conjunction with the annual audit readiness certification requi red under469 division (a.1)(1)(B)(i) of Code Section 20-2-67 without written authorization from the470 state auditor. The state auditor shall provide such authorizat ion only in exceptional471 cases due to reasonable cost considerations or scarcity of locally available professional472 service providers.473 (2) The state auditor shall annually submit a written report t o the State Board of474 Education of the local school systems and state charter schools that were audited by475 certified public accountants pursuant to this subsection.476 (f) The Department of Audits and Accounts shall adopt rules, regulations, guidance, and477 procedures necessary to implement this Code section."478 SECTION 11.479 Said chapter is further amended by adding a new Code section to read as follows:480 "50-6-6.1.481 (a) As used in this Code section, the term:482 (1) 'Local school system' means and includes each local school system and each483 completion special school, as provided for in Article 31C of this chapter, in this state.484 (2) 'State charter school' shall have the same meaning as set forth in Code485 Section 20-2-2081.486 H. B. 1164 - 19 - 26 LC 49 2695S/AP (b) By July 1, 2026, the Department of Audits and Accounts sha ll develop and begin487 implementing a program, the purpose of which is to:488 (1) Monitor the fiscal condition of each local school system and state charter school in489 this state;490 (2) Provide progressive levels of monitoring, supports, and interventions to local school491 systems and state charter schools, ranging from technical assis tance and audit services492 to significant interventions including strict compliance requirements; and493 (3) Provide reports of the fiscal condition of local school sy stems and state charter494 schools at appropriate intervals.495 (c) The program shall consider indicators of fiscal concern, including, but not limited to:496 (1) Revenue and fund balance indicators;497 (2) Cash flow and liquidity indicators;498 (3) Debt and obligations indicators;499 (4) Pension and other post-employment benefits (OPEB);500 (5) Budget and management indicators;501 (6) Audit and compliance indicators;502 (7) Enrollment and revenue base indicators;503 (8) State compliance indicators;504 (9) Fraud and criminal activity indicators; and505 (10) Any other fiscal condition of the local school system or state charter school the state506 auditor deems to have a detrimental effect on the local school system's or state charter507 school's ability to continue providing required educational programs and services.508 (d) The program shall include a graduated four-tiered framework for the assessment of the509 fiscal conditions of each local school system or state charter school with an escalating510 course of monitoring, supports, and interventions aligned with each tier, with the following511 designations and descriptions:512 H. B. 1164 - 20 - 26 LC 49 2695S/AP (1) Tier 1 - Fiscally Sound: a local school system or state charter school is showing no513 signs of fiscal stress;514 (2) Tier 2 - Fiscal Watch: a local school system or state charter school is showing signs515 of fiscal stress and is required to comply with a state-approve d corrective action and516 fiscal recovery plan;517 (3) Tier 3 - Fiscal Distress: a local school system or state c harter school is required to518 comply with a state-approved comprehensive fiscal plan to return the local school system519 or state charter school to fiscal stability within a specified time frame; and520 (4) Tier 4 - Critical Fiscal Emergency: a local school system or state charter school is521 required to strictly comply with a state-approved intervention plan and shall not be522 eligible to receive advance distributions of state allotted funds distributed under Article 6523 of Chapter 2 of Title 20, the 'Quality Basic Education Act,' except as recommended by524 the state auditor and approved by the State Board of Education.525 (e)(1) Each local school system or state charter school determined by the state auditor526 to require Tier 2 monitoring, supports, and interventions shall be deemed a 'moderate-risk527 local school system' or a 'moderate-risk state charter school' as provided for in Code528 Section 20-2-67.529 (2) Each local school system and state charter school determined by the state auditor to530 require Tier 3 or Tier 4 monitoring, supports, and intervention s shall be deemed a531 'high-risk local school system' or 'high-risk state charter school' as provided for in Code532 Section 20-2-67.533 (f) In collaboration with the State Board of Education, the Office of Student Achievement,534 and the State Charter School Commission, the Department of Audits and Accounts shall535 promulgate policies, rules, regulations, and guidance that prov ide for and specify with536 detail:537 (1) The conditions and indicators for each of the tiers provided for in subsection (d) of538 this Code section;539 H. B. 1164 - 21 - 26 LC 49 2695S/AP (2) The conditions under which a local school system or state charter school may move540 from one such tier to another;541 (3) The state-level monitoring, supports, and interventions to be made available to local542 school systems or state charter schools at each tier; and543 (4) When a strict compliance standard shall be applied to a local school system or state544 charter school by the Department of Audits and Accounts or the State Board of Education545 which shall include, but shall not be limited to, any intervent ion plan adopted by546 resolution of the local board of education or other governing b ody of the local school547 system as provided for in Code Section 20-2-166.548 (g) The program required under this Code section shall be full y implemented by the549 beginning of the 2028-2029 school year. The state auditor shal l have discretionary550 authority to prioritize which local school systems and state charter schools are the subject551 of monitoring, supports, and intervention under such program; p rovided, however, that552 such discretion is exercised on the basis of objective criteria provided in writing by the553 state auditor to the State Board of Education; and provided, further, that, if the State Board554 of Education or State School Superintendent refers a local school system or state charter555 school for monitoring, supports, or interventions under such program, the state auditor shall556 promptly evaluate and determine whether such local school system or state charter school557 shall be the subject of monitoring, supports, and intervention under such program."558 SECTION 12.559 Said chapter is further amended by revising Code Section 50-6-28, relating to investigatory560 duties generally, as follows:561 "50-6-28.562 (a) It shall be the duty of the state auditor to make an investigation as a part of his or her563 audit of each and every department of the state government. When there are facts, records,564 circumstances, or information that indicate mismanagement or misconduct on the part of565 H. B. 1164 - 22 - 26 LC 49 2695S/AP any official or employee of any department of the state government during either a past or566 present administration, it shall be the duty of the state auditor to make the full investigation,567 as provided in Code Section 50-6-29, of the department, official, or employee.568 (b) The state auditor shall be authorized to make an investiga tion of any local school569 system or state charter school, as such terms are defined in Co de Section 50-6-6, in the570 state. When there are facts, records, circumstances, or inform ation that indicate571 mismanagement or misconduct on the part of any official or employee of any local school572 system or state charter school in the state during either a past or present administration, it573 shall be the duty of the state auditor to make the full investi gation, as provided in Code574 Section 50-6-29, of the local school system, state charter school, official, or employee."575 SECTION 13.576 This Act shall become effective on July 1, 2026.577 SECTION 14.578 All laws and parts of laws in conflict with this Act are repealed.579 H. B. 1164 - 23 -