Revision: March 17, 2026, 10:10 a.m.
SB 586-FN - AS AMENDED BY THE SENATE
03/05/2026 0772s
2026 SESSION
26-2110
07/05
SENATE BILL 586-FN
SPONSORS: Sen. Murphy, Dist 16; Sen. Gannon, Dist 23; Sen. Pearl, Dist 17; Sen. Sullivan, Dist 18; Sen. Innis, Dist 7; Sen. Avard, Dist 12; Sen. Ward, Dist 8; Sen. Birdsell, Dist 19; Sen. Carson, Dist 14
COMMITTEE: Election Law and Municipal Affairs
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ANALYSIS
This bill requires school districts to publish a school administrative unit audit report after the end of the fiscal year.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
03/05/2026 0772s 26-2110
07/05
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Twenty-Six
AN ACT requiring school districts to publish a school administrative unit audit report after the end of the fiscal year.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Education; District Taxes; Reports Required; Cities and School Districts. RSA 198:4-d, III is repealed and reenacted to read as follows:
III. Each city, school district, and chartered public school shall file a report for the preceding fiscal year showing a summary of receipts and expenditures, according to uniform classifications, and a balance sheet showing assets and liabilities at the close of the year. This report shall be either an audit completed and verified by an independent certified public accountant or, if no such audit is completed, a financial audit report filed by the governing body of the city, school district, or chartered public school that includes balance sheets; a breakdown of revenue sources; an itemized list of all employees or staff on payroll and their pay; and an itemized list of the school or district's assets, debts, bonds, lease agreements, and capital improvement investment projects. Upon receipt of the final audit or financial report, the school board shall submit the audit or financial report to the department of education. The audit or financial report for the last completed fiscal year shall be submitted within 6 months of the fiscal year. Each report submitted under this paragraph shall include a certification signed by the chairperson of the school district's governing body or the chairperson of the board of trustees of approved public academies that states: "I certify, under the pains and penalties of perjury, to the best of my knowledge and belief, that all of the information contained in this document is true, accurate, and complete." The commissioner of the department of education shall verify that the report appears complete within 6 months of receipt, comparing it against those submitted in prior years. The department may grant extensions to cities, school districts, chartered public schools, and school boards as needed to address any disputed items. Unless the district is actively working with the department to resolve any financial audit or report deficiencies, in no case shall the deficiencies exceed one year from the date of the submission. The commissioner shall withhold any and all state funding allocated to any non-compliant city, school district, or chartered public school until the audit or financial report is completed and submitted to the department, and any questions are answered to the commissioner's satisfaction.
2 Effective Date. This act shall take effect July 1, 2026.
26-2110
3/16/26
SB 586-FN- FISCAL NOTE
AS AMENDED BY THE SENATE (AMENDMENT #2026-0772s)
FISCAL IMPACT: This bill does not provide funding, nor does it authorize new positions.
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Estimated State Impact | ||||||
| FY 2026 | FY 2027 | FY 2028 | FY 2029 | ||
Revenue | $0 | Indeterminable | ||||
Revenue Fund(s) | Education Trust Fund | |||||
Expenditures* | $0 | Department of Education Staffing/Admin $534K in FY 27, $461K in FY 28, and $484K in FY 29
State Aid Programs Indeterminable | ||||
Funding Source(s) | General Fund and Education Trust Fund | |||||
Appropriations* | $0 | $0 | $0 | $0 | ||
Funding Source(s) | None | |||||
*Expenditure = Cost of bill *Appropriation = Authorized funding to cover cost of bill | ||||||
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Estimated Political Subdivision Impact | ||||||
| FY 2026 | FY 2027 | FY 2028 | FY 2029 | ||
Local Revenue | $0 | Indeterminable | ||||
Local Expenditures | $0 | Indeterminable | ||||
METHODOLOGY:
This bill, effective July 1, 2026, requires district public school and charter public schools to complete a financial audit by January 1st each year and requires the Department of Education to withhold all state funding until completed. Under current law and practice, districts are required to complete an audit 12 months after fiscal year close and charter schools are required to submit after 9 months. For FY 2024, 55% of districts returned an audit within 12 months, and 58% of charter schools returned an audit within 9 months. Only 7 public charter schools and 13 district schools returned an audit by January 1st after the fiscal year end.
To effectively manage the review, tracking, and oversight of 179 school district and 35 charter school audits, the Department states it would need two positions focused on district public schools and one position for charter schools. Furthermore, a contract amendment to develop a new module within an existing software system would require $75,000.
| FY 2027 | FY 2028 | FY 2029 |
Two (2) District Auditors (SOC 13-09, Starting Step 9) | $320,000 | $318,000 | $334,000 |
One (1) Charter School Auditor (SOC 13-09, Starting Step 5) | $139,000 | $143,000 | $150,000 |
Contract Expense | $75,000 | $0 | $0 |
Total | $534,000 | $461,000 | $484,000 |
To adapt to the provisions of this bill, the Department states districts would likely take multiple different approaches, which may include:
The Department states that while districts are unable to dissolve and relinquish their responsibility to provide an adequate education, charter schools would likely dissolve due to this bill, since they are heavily reliant on State cash payments. To the extent that charter schools dissolve, the State will likely make less charter school payments. The decrease in State expenditures would depend on the pathway the students elect after their charter school dissolves:
For informational purposes, using only State cash adequacy grants to districts, the below table represents the changes in the payment distribution schedule based on district submission of their FY 2024 audits using the FY 2027 adequacy cash payment of $698 million. This does not include other State aid programs like Special Education Aid, Tuition & Transportation, Building Aid, or charter school aid which would also be withheld. The table concludes based on withholding State adequacy payments only, State revenue in interest due to cash staying with the State Treasury would increase by $1M. Conversely, this would result in less interest revenue or increased borrowing expenditures for local school districts of approximately $1M in FY 2027.
District Adequacy Paid Based On Completed Audit | Prorated Interest Revenue For State / Interest Expense or Revenue Loss For Districts (Assumes 3% Interest Revenue) | ||
Total Funding | $ 698,127,641 | ||
Paid | Withheld | ||
September 1st Amount | $139,625,528 | $0 |
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Percent Paid Or Withheld | 100.0% | 0.0% |
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November 1st | $139,625,528 | $0 | $0 |
Percent Paid Or Withheld | 100.0% | 0.0% |
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January 1st | $209,438,292 | $0 | $0 |
Percent Paid Or Withheld | 100.0% | 0.0% |
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April 1st | $71,773,797 | $137,664,496 | $1,032,484 |
| 34.3% | 65.7% |
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End of Fiscal Year FY 2027 | $1,032,484 | ||
AGENCIES CONTACTED:
Department of Education