AN ACT IMPLEMENTING THE RECOMMENDATIONS OF THE AUDITORS OF PUBLIC ACCOUNTS.

Senate Bill No. 247

Public Act No. 26-109

AN ACT IMPLEMENTING THE RECOMMENDATIONS OF THE
AUDITORS OF PUBLIC ACCOUNTS.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:

Section 1. Section 4 -40b of the general statutes is repealed and the
following is substituted in lieu thereof (Effective October 1, 2026):
(a) For the purposes of this section, "state agency" means any
department, board, council, commission, institution or other executive
branch agency of state government, including, but not limited to, each
constituent unit and each public institution of higher education. On and
after October 1, [2018] 2026, no state agency shall make a payment in
excess of fifty thousand dollars to an employee resigning or retiring
from employment with such state agency for the purposes of avoiding
costs associated with pote ntial litigation or pursuant to a
nondisparagement agreement or pursuant to any other agreement that
prohibits an employee from working while continuing to be paid the
employee's regular salary and benefits, unless such payment (1) is made
for administrative leave authorized by the Office of Labor Relations
pending a disciplinary investigation, (2) is made pursuant to [(1)] (A) a
settlement agreement entered into by the Attorney General on behalf of
the state agency, [or (2)] (B) an authorization by the Governor pursuant
to section 3 -7, (C) a collective bargaining agreement such employee is
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subject to, or (D) an employment contract, or (3) is otherwise required
by state or federal law.
(b) No settlement agreement , [or] nondisparagement agreement or
other agreement , as described in subsection (a) of this section, may
prohibit an employee from making a complaint or providing
information in accordance with section 4-61dd or sections 4-276 to 4-280,
inclusive.
Sec. 2. Section 4-37f of the 2026 supplement to the general statutes is
repealed and the following is substituted in lieu thereof (Effective October
1, 2026, and applicable to any agreement entered into or renewed on or after
said date):
The executive authority of each state agency for which a foundation
is established shall, in accordance with a policy adopted by the board of
trustees of the constituent unit for each state agency which is a
constituent unit or which is a public institution of higher education
under the jurisdiction of the constituent unit, ensure that, or the
executive authority of each state agency for which a foundation is
established for the principal purpose of coordina ted emergency
recovery shall ensure that:
(1) The foundation [shall have] has a governing board to oversee its
operation;
(2) If the state agency is a constituent unit, the following persons
[shall] serve as nonvoting members of the governing board of the
foundation unless the bylaws of the foundation provide that they be
voting members: The executive authority of the constituent unit, or [his]
such executive authority's designee, a student enrolled at an institution
under the jurisdiction of the constituent unit, who [shall be] is elected
by the students enrolled at the institutions under the jurisdiction of the
constituent unit, and a member of the faculty of any such institution,
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who [shall be ] is elected by the faculty of the institutions under the
jurisdiction of the constituent unit. Elections pursuant to this
subdivision shall be conducted in accordance with procedures for such
elections established by the board of trustees of the constituent unit;
(3) If the constituent unit is the Connecticut State Community College
or the Connecticut State University System, the purposes of the
foundation [shall be ] are limited to providing funding for (A)
scholarships or other direct student financial aid, and (B) programs,
services or activities at one or more of the institutions within its
jurisdiction;
(4) If the state agency is a public institution of higher education, the
following persons [shall] serve as nonvoting members of the governing
board of the foundation unless the bylaws of the foundation provide
that they be voting members: The executive authority of the institution,
or [his] such executive authority's designee, a student enrolled at the
institution, who [shall be ] is elected by the students enrolled in the
institution, and a member of the faculty of the institution, who [shall be]
is elected by the faculty of the institution. Elections pursuant to this
subdivision shall be conducted in accordance with procedures for such
elections established by the governing board of the constituent unit
which has jurisdiction over the institution;
(5) The governing board of the foundation [shall] annually [file] files
with the state agency an updated list of the members and officers of such
board;
(6) The salaries, benefits and expenses of officers and employees of
the foundation [shall be] are paid solely by the foundation, unless such
officers or employees are state employees receiving salaries, benefits
and expenses paid by the state pursuant to an agreement entered into
under subdivision (10) of this section;
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(7) The foundation [shall use ] uses generally accepted accounting
principles in its financial record-keeping and reporting and [shall] does
not engage in any prohibited act, as described under section 21a-190h of
the Solicitation of Charitable Funds Act;
(8) A foundation which has in any of its fiscal years receipts and
earnings from investments totaling two hundred fifty thousand dollars
per fiscal year or more, or a foundation established for the principal
purpose of coordinated emergency recovery that operated in response
to an eligible incident, as defined in section 4-37r, during the fiscal year
or with funds that exceeded two hundred fifty thousand dollars in the
aggregate, [shall have] has completed on its behalf for such fiscal year a
full audit of the books and accounts of the foundation. A foundation
which has receipts and earnings from investments totaling less than two
hundred fifty thousand dollars in each fiscal year during any three of its
consecutive fiscal years beginning October 1, 2018, shall have completed
on its behalf for the third fiscal year in any such three-year period a full
audit of the books and accounts of the foundation, unless such
foundation was established for the principal purpose of c oordinated
emergency recovery and had completed on its behalf such an audit for
any year in any such three-year period. For each fiscal year in which an
audit is not required pursuant to this subdivision financial statements
shall be provided by the foundation to the executive authority of the
state agency. Each audit under this subdivision shall be (A) conducted
by an independent certified public accountant or, if requested by the
state agency with the consent of the foundation, the Auditors of Public
Accounts, (B) conducted in accordance with generally accepted auditing
standards, and (C) completed, and a copy of such audit submitted, in
accordance with this section, not later than six months after the end of
the applicable fiscal year. The auditor shall submit (i) a report that
includes an opinion regarding the financial statements and a
management letter, and (ii) a report that includes an opinion on
conformance of the operating procedures of the foundation with the
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provisions of sections 4-37e to 4-37i, inclusive, and recommendations for
any corrective actions needed to ensure such conformance. Each audit
report shall disclose the receipt or use by the foundation of any public
funds in violation of said sections or any other provision of the general
statutes. The foundation shall provide a copy of each audit report
completed pursuant to this subdivision to the executive authority of the
state agency and the Attorney General. Each financial statement
required under this subdivision shall include, for the fiscal year to which
the statement applies, the total receipts and earnings from investments
of the foundation and the amount and purpose of each receipt of funds
by the state agency from the foundation. As used in this subdivision,
"fiscal year" means any twelve -month period adopted by a foundation
as its accounting year;
(9) If the state agency is The University of Connecticut and the
foundation has an endowment fund with a market value that is greater
than one million five hundred thousand dollars, the foundation [shall]
annually [provide] provides the following, in accordance with the
provisions of section 11 -4a, to the joint standing committee of the
General Assembly having cognizance of matters relating to higher
education, the speaker of the House of Representatives, the president
pro tempore of the Senate, the majorit y leader of the House of
Representatives, the majority leader of the Senate, the minority leader
of the House of Representatives and the minority leader of the Senate:
(A) A list of the current members and officers of the governing board of
the foundation; (B) a copy of the most recent annual report of the
foundation; (C) a copy of the most recent audited financial statements,
management letter and audit reports of the foundation that are required
under subdivision (8) of this section; (D) a copy of the written agreement
between the state agency and the foundation that is required under
subdivision (10) of this section; (E) a copy of the written policy required
under section 4 -37j; (F) a copy of any conflicts of interest policy of the
foundation; (G) a copy of the foundation's most recently filed Internal
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Revenue Service form 990, including all parts and schedules that are
required to be made available for public inspection under the Internal
Revenue Code of 1986, or any subsequent corresponding internal
revenue code of the United States, as amended from time to time; (H) a
copy of the bylaws of the foundation; (I) a report of the total number
and average size of disbursements made to each public institution of
higher education for (i) undergraduate and graduate scholarships,
fellowships and awards, (ii) pro gram and research support, (iii)
equipment, and (iv) facilities construction, improvements and related
expenses; (J) as to any employee of the public institution of higher
education for whom the foundation contributes some or all of the salary,
wages or fr inge benefit expenses, a report listing the position of each
such employee and, for each position, the amount of the financial
reimbursement by the foundation to the public institutions of higher
education for such employee's salary, wages or fringe benefit expenses;
(K) the identity of any person, firm, corporation or other entity donating
funds or other things of value to the foundation, unless the donor has
requested that such donor's identity not be publicly disclosed; and (L) a
list of all deanships, professorships, chairs, schools, institutes, centers or
facilities of the state agency that were named in recognition of
foundation donors upon the approval of the board of trustees of the
state agency during the preceding fiscal year. The information delivered
under this subdivision shall constitute a public record and shall be
disclosed in accordance with the Freedom of Information Act, as defined
in section 1-200. Nothing in this subdivision shall require the disclosure
of the identity of any person, firm , corporation or other entity that
donated or made a commitment to donate funds or other things of value
to the foundation prior to July 1, 2017;
(10) There [shall be] is a written agreement between the state agency
and the foundation that (A) addresses any use by the foundation of the
agency's facilities and resources including, but not limited to, office
space, storage space, office furniture and equipment, utilities,
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photocopying services, computer systems and the maintenance by the
state agency of the books and records of the foundation, provided any
such books and records maintained by the state agency shall not be
deemed to be public records and shall not be subject to disclosure
pursuant to the provisions of section 1 -210, (B) provides that the state
agency shall have no liability for the obligations, acts or omissions of the
foundation, (C) requires the foundation to reimburse the state agency
for expenses the agen cy incurs as a result of foundation operations, if
the agency would not have otherwise incurred such expenses, including
whether any portion of the expenses, salaries or benefits of state
employees providing services to the foundation are to be reimbursed by
the foundation and, if so, in what amount, (D) in the case of foundations
established for a constituent unit of the state system of higher education
or for a public institution of higher education, requires the foundation
to establish and adhere to an i nvestment policy and a spending policy
that are consistent with sections 45a -535 to 45a -535i, inclusive, (E) on
and after July 1, 2017, if the state agency is The University of
Connecticut, provides that (i) the total cash compensation to be paid in
a fiscal year by the state agency to the foundation shall decrease from
the amount paid in the preceding fiscal year or the amount paid in the
fiscal year ending June 30, 2016, whichever is greater, by (I) one million
dollars when the market value of the foundat ion's endowment fund as
of January first of the preceding fiscal year is equal to or greater than
five hundred million dollars but less than seven hundred million
dollars, (II) one million five hundred thousand dollars when the market
value of such fund as of January first of the preceding fiscal year is equal
to or greater than seven hundred million dollars but less than nine
hundred million dollars, or (III) three million dollars when the market
value of such fund as of January first of the preceding fiscal year is equal
to or greater than nine hundred million dollars but less than one billion
two hundred fifty million dollars, (ii) no cash compensation shall be
paid by the state agency to the foundation when the amount in such
foundation's endowment fund as of January first of the preceding fiscal
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year is equal to or greater than one billion two hundred fifty million
dollars, (iii) if the market value of the foundation's endowment fund as
of January first of the preceding fiscal year decreases below any of the
thresholds stated in subclause (I), (II ) or (III) of clause (i) of this
subparagraph, then the amount of the cash payment to the foundation
shall be increased to equal the same amount that was paid to the
foundation prior to exceeding the threshold in subclause (I), (II) or (III)
of clause (i) of this subparagraph, until the July first following a January
first on which the market value of the foundation's endowment fund
again exceeds such threshold, and (iv) in any fiscal year, if the two-year
average of total gifts and commitments reported by the foundation,
pursuant to subparagraph (B) of subdivision (9) of this section, for the
preceding two fiscal years is not less than five times the average total
cash compensation paid by the state agency during the same period, the
provisions of clauses (i) to (iii), inclusive, of this subparagraph shall not
be applicable to the cash compensation paid by the state agency to the
foundation in such fiscal year, (F) on and after July 1, 2017, requires the
foundation to use reasonable efforts to raise gifts and commitments each
fiscal year for student support, including, but not limited to,
scholarships, assistantships, fellowships, awards and prizes, that equal
not less than fifteen per cent of the total amount of all gifts and
commitments raised by the founda tion in the same fiscal year, and (G)
provides that if the foundation ceases to exist or ceases to be a
foundation, as defined in section 4 -37e, (i) the foundation shall be
prohibited from using the name of the state agency, (ii) the records of
the foundation, or copies of such records, shall be made available to and
may be retained by the state agency, provided any such records or
copies which are retained by the state agency shall not be deemed to be
public records and shall not be subject to disclosure p ursuant to the
provisions of section 1 -210, and (iii) there are procedures for the
disposition of the financial and other assets of the foundation. If the state
agency is a constituent unit, the board of trustees of the constituent unit
shall approve such agreement. If the state agency is a public institution
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of higher education, the board of trustees of the constituent unit which
has jurisdiction over the institution shall approve such agreement; and
(11) If the foundation is established for the principal purpose of
coordinated emergency recovery, the Department of Emergency
Services and Public Protection [shall be] is deemed the state agency for
purposes of this section, and the deputy commissioner of said
department with jurisdiction over the Division of Emergency
Management and Homeland Security [shall be] is deemed the executive
authority for purposes of this section.
Sec. 3. Subsection (b) of section 2 -90 of the 2026 supplement to the
general statutes is repealed and the following is substituted in lieu
thereof (Effective October 1, 2026):
(b) Said auditors [, with the Comptroller,] shall, at least annually and
as frequently as they deem necessary, audit the books and accounts of
the Treasurer, including, but not limited to, trust funds, as defined in
section 3-13c, and certify the results to the Governor. The auditors shall,
at least annually and as frequently as they deem necessary, audit the
books and accounts of the Comptroller and certify the results to the
Governor. They shall examine and prepare certificates of audit with
respect to the financial statements contained in the annual reports of the
Treasurer and Comptroller, which certificates shall be made part of such
annual reports. In carrying out their responsibilities under this section,
said auditors may retain independent auditors to assist them.
Sec. 4. Subsection (a) of section 4e-6 of the general statutes is repealed
and the following is substituted in lieu thereof (Effective October 1, 2026):
(a) The board shall conduct audits of state contracting agencies,
triennially, to ensure compliance with statutes and regulations
concerning procurement. In conducting each such audit, the board shall
have access to all contracting and procurement records [,] and may
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interview any and all personnel responsible for contracting, contract
negotiations or procurement. [and may enter into an agreement with the
Auditors of Public Accounts to effectuate such audit.]
Sec. 5. Section 2 -90d of the general statutes is repealed and the
following is substituted in lieu thereof (Effective October 1, 2026):
On and after October 1, [2021] 2026, any state agency proposing to
enter into or amend a contract for the purchase of auditing services of
any value shall [(1)] notify the Auditors of Public Accounts of such
contract at least fifteen days prior to entering into or amending such
contract. [, and (2) not enter into or amend such contract until the
Auditors of Public Accounts have advised the agency whether the
auditing services could be provided by said auditors. ] Any such state
agency shall (1) ensure that a ny such contract requires the entity
providing such auditing services to provide any information related to
the audit to the Auditors of Public Accounts upon request, and (2)
provide a copy of such audit to the Auditors of Public Accounts upon
request. As used in this section, "state agency" has the same meaning as
provided in section 4-37e and "contract" does not include any personal
service agreement subject to the provisions of section 4-216, as amended
by this act.
Sec. 6. Section 4 -216 of the general statutes is repealed and the
following is substituted in lieu thereof (Effective October 1, 2026):
(a) No state agency may execute a personal service agreement having
a cost of more than fifty thousand dollars without the approval of the
secretary. A state agency may apply for an approval by submitting the
following information to the secretary: (1) A descr iption of the services
to be purchased and the need for such services; (2) an estimate of the
cost of the services and the term of the agreement; (3) whether the
services are to be [on-going] ongoing; (4) whether the state agency has
contracted out for such services during the preceding two years and, if
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so, the name of the contractor, term of the agreement with such
contractor and the amount paid to the contractor; (5) whether any other
state agency has the resources to provide the services; (6) whether the
agency intends to purchase the services by competitive negotiation and,
if not, why; and (7) whether it is possible to purchase the services on a
cooperative basis with other state agencies. In the case of a proposed
personal services agreement for audit services, the agency shall notify
the Auditors of Public Accounts of [a] any proposed personal services
agreement for audit services. [and give said auditors an opportunity to
review the application and advise the agency whether such audit
services are necessary and, if so, could be provided by said auditors ]
The state agency shall ensure that any such agreement requires the
entity providing such auditing services to provide any information
related to the audit to the Auditors of Public Accounts upon request,
and the state agency shall provide a copy of s uch audit to the Auditors
of Public Accounts upon request.
(b) Each personal service agreement having a cost of more than fifty
thousand dollars shall be based on competitive negotiation or
competitive quotations, unless the state agency purchasing the personal
services determines that a sole source purchase is requir ed and applies
to the secretary for a waiver from such requirement and the secretary
grants the waiver. The secretary shall adopt guidelines for determining
the types of services that may qualify for such waivers. The qualifying
services shall include, but not be limited to, (1) services for which the
cost to the state of a competitive selection procedure would outweigh
the benefits of such procedure, as documented by the state agency, (2)
proprietary services, (3) services to be provided by a contracto r
mandated by the general statutes or a public or special act, and (4)
emergency services, including services needed for the protection of life
or health. The secretary shall post any approvals of requests for a waiver
received under this section on the St ate Contracting Portal. Not later
than January 15, 2024, and annually thereafter, the secretary shall
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submit a report, in accordance with the provisions of section 11 -4a, to
the joint standing committees of the General Assembly having
cognizance of matters relating to appropriations and the budgets of state
agencies and government administration and the St ate Contracting
Standards Board listing any such waiver requests received during the
prior year and the justification for the grant or denial of such request.
Sec. 7. Section 1 -123 of the general statutes is repealed and the
following is substituted in lieu thereof (Effective October 1, 2026):
(a) [The] Not later than six months after the end of its fiscal year, the
board of directors of each quasi -public agency shall [annually] submit
[a] an annual report to the Governor and the Auditors of Public
Accounts. Such report shall include, but need not be limited to, the
following: (1) A list of all bond issues for the preceding fiscal year,
including, for each such issue, the financial advisor and underw riters,
whether the issue was competitive, negotiated or privately placed, and
the issue's face value and net proceeds; (2) a list of all projects other than
those pertaining to owner-occupied housing or student loans receiving
financial assistance during the preceding fiscal year, including each
project's purpose, location, and the amount of funds provided by the
agency; (3) a list of all outside individuals and firms receiving in excess
of five thousand dollars in the form of loans, grants or payments for
services, except for individuals receiving loans for owner -occupied
housing and education; (4) a complete set of financial statements; (5) the
cumulative value of all bon ds issued, the value of outstanding bonds,
and the amount of the state's contingent liability; (6) the affirmative
action policy statement, a description of the composition of the agency's
work force by race, sex, and occupation and a description of the agency's
affirmative action efforts; and (7) a description of planned activities for
the current fiscal year.
(b) For the quarter commencing July 1, 2010, and for each quarter
thereafter, the board of directors of each quasi -public agency shall
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submit a report to the Office of Fiscal Analysis. Such report shall
include, but not be limited to, for each fund and account of the agency:
(1) The beginning fiscal year balance; (2) all funds expended and all
revenue collected by the end of the quarter; and (3) t otal expenditures
and revenues estimated at the end of the fiscal year. For the purposes of
this subsection, "expenditures" and "revenues" have the same meaning
as provided in section 4-69.
(c) For the quarter commencing July 1, 2010, and for each quarter
thereafter, the board of directors of each quasi -public agency shall
submit a personnel status report to the Office of Fiscal Analysis. Such
report shall include, but not be limited to: (1) The total number of
employees by the end of the quarter; (2) the positions vacated and the
positions filled by the end of the quarter; and (3) the positions estimated
to be vacant and the positions estimated to be filled at the end of the
fiscal year.
Sec. 8. Section 4d -9 of the general statutes is repealed and the
following is substituted in lieu thereof (Effective October 1, 2026):
There shall be a Technical Services Revolving Fund in the
Department of Administrative Services for the purchase, installation
and utilization of information and telecommunication systems, as such
terms are defined in section 4d-1, for budgeted agencies of the state. The
Commissioner of Administrative Services and the Secretary of the Office
of Policy and Management shall jointly be responsible for the
administration of said fund. Said commissioner and said secretary shall
regularly review said fund using g enerally accepted accounting
principles and the Auditors of Public Accounts shall conduct an annual
comprehensive financial review of said fund as part of the audit of the
annual comprehensive financial report issued by the Comptroller.