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STATE OF OKLAHOMA
2nd Session of the 60th Legislature (2026)
SENATE BILL 1399 By: Bergstrom
AS INTRODUCED
An Act relating to federal funds; creating the
Federal Funds Oversight Act; providing short title;
defining term; requiring state agencies and the
Office of Management and Enterprise Services (OMES)
to submit report; prescribing reporting requirement;
requiring state agencies to leverage federal funds to
offset state spending under certain circumstance;
requiring certain employment practices in connection
with federal funds; requiring state agencies to
ensure that federal funding lapses will not lead to a
budget deficit; requiring certain state agencies to
provide OMES and the State Auditor and Inspector with
access to information; requiring certain state
agencies to report alleged improper payments;
requiring certain state agencies to create a
transparency portal; prescribing requirements for
transparency portal; establishing the Do-Not-Pay
Pilot Program; requiring OMES to enter certain
memorandum of understanding; prescribing requirements
of the program; authorizing OMES to promulgate rules;
requiring entities that receive improper payments to
be held liable under certain law; requiring OMES to
provide certain notice; requiring the refusal of
federal funds under certain circumstances; requiring
OMES to review current federal funding; providing for
noncodification; providing for codification; and
providing an effective date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. NEW LAW A new section of law not to be
codified in the Oklahoma Statutes reads as follows:
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This act shall be known and may be cited as the “Federal Funds
Oversight Act”.
SECTION 2. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 77f of Title 74, unless there is
created a duplication in numbering, reads as follows:
A. As used in this section, “state agency” means any
department, board, commission, institution, public trust with the
state as beneficiary, agency, or entity of state government.
B. For fiscal year 2028 and subsequent fiscal years, prior to
accepting federal funding, the Office of Management and Enterprise
Services (OMES) and the state agency which will be charged with
accepting the federal funding shall electronically submit a report
to the Governor, the President Pro Tempore of the Senate, the
Speaker of the House of Representatives, the State Auditor and
Inspector, and the State Treasurer, which shall include:
1. A summary of the program accepting the federal funding,
including a citation to the statutory authority for the program;
2. The compelling reasons to accept the federal funding;
3. The performance metrics and achievable goals of the federal
funding;
4. The amount of new federal funding the agency anticipates
receiving;
5. The time frame for the receipt of funds and when the federal
funding ends;
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6. The federal requirements and mandates attached to the
federal funding and the impacts on the program, state funding, and
goals of the program;
7. A fiscal note disclosing the total cost of federal funding,
including an analysis of the cost of the federal mandates for the
current fiscal year and subsequent four (4) fiscal years. The
fiscal note shall clearly delineate:
a. acquisition costs,
b. personnel costs,
c. maintenance costs,
d. advertising costs,
e. cost-per-person for which the federal funding will
assist, and
f. salvage costs, if any;
8. A statement as to whether the anticipated funding is
allocated through an existing or new federal program and, if an
existing program, the current amount of state dedicated funds
committed to the program;
9. A statement as to whether additional state employees are
necessary to oversee or administer the federal funds;
10. The requirements associated with spending the federal
funds, including any state match or cost share requirements,
percentage limitations, and time frames;
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11. An analysis of internal controls used to prevent and
eliminate improper payments and fraud; and
12. The process by which the agency will operate and distribute
federal funds to meet performance metrics and goals.
C. State agencies receiving federal funds shall:
1. To the extent allowable under law, leverage the new federal
funding to offset existing state general fund obligations rather
than apply the federal funds to new or expanded programs;
2. Only hire new employees in connection with or as a result of
the new federal funding to limited-service employees whose
employment shall not last beyond the expenditure of the federal
funds;
3. Financially manage federal funding to ensure that the loss
of federal funding does not result in a budget deficit for the
program;
4. Provide complete access to information for OMES to provide a
quarterly update on federal funding and how it is meeting the
performance metrics and goals as stated in this section;
5. Provide complete access for the State Auditor and Inspector
to perform audits on the internal control processes of the agency;
and
6. Report alleged or potential improper payments or fraud to
the:
a. State Auditor and Inspector,
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b. Attorney General,
c. United States Attorney, and
d. The Office of the Inspector General of the United
States.
D. An agency shall establish a transparency portal on the
publicly accessible website of the agency. The transparency portal
shall provide current information about expenditures of federal
funding that is updated from the close of the prior business day.
The transparency portal shall include:
1. The eligible entities that received a portion of the federal
funding;
2. The amount of federal funding each eligible entity received;
3. The total dollar amount of federal funding disbursed;
4. The amount of federal funding that remains not disbursed;
5. How the agency is meeting the performance metrics and goals
provided for in this section;
6. An analysis and summary of improper payments under the
Improper Payments Elimination and Recovery Act of 2010 for federal
and state funds; and
7. Any documents submitted to an agency by eligible entities
pertaining to federal funding.
E. After the final disbursement of federal funding received by
an agency, the agency shall electronically submit a report to the
Governor, the President Pro Tempore of the Senate, the Speaker of
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the House of Representatives, the State Auditor and Inspector, and
the State Treasurer on all of the following:
1. The final disbursement of the federal funding;
2. The use of the Do-Not-Pay Pilot Program established pursuant
to subsection F of this section;
3. The number of entities that were eligible and ineligible to
receive the federal funding;
4. The savings to this state as a result of the identification
of entities that are ineligible to receive money from the federal
funding;
5. The results of the single audits of the program and how the
agency addressed the findings of each single audit;
6. The results of any other federal or state audit and how the
agency addressed the findings of each audit;
7. The total amount of federal funding received in each county
of this state; and
8. The total improper payments under the Improper Payments
Elimination and Recovery Act of 2010 for federal and state funding.
F. There is hereby established the Do-Not-Pay Pilot Program in
the Office of Management and Enterprise Services. As part of the
program, OMES shall enter a memorandum of understanding with the
United States Department of the Treasury that satisfies the
requirements of this section. Before issuing a reimbursement for
eligible expenses under this section to an entity, OMES shall
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utilize the Do-Not-Pay Pilot Program to ensure that the entity is
eligible to receive the reimbursement. OMES may promulgate rules to
effectuate the provisions of this subsection.
G. 1. An eligible entity that receives money from the fund and
makes improper payments shall be held liable by this state under the
Improper Payments Elimination and Recovery Act of 2010 for the total
amount of any disallowance of federal funds as a result of the
improper payments.
2. An eligible entity that misuses federal funds may be subject
to civil action.
3. OMES shall provide notice of the penalties specified under
paragraphs 1 and 2 of this subsection to each eligible entity that
receives federal funding.
H. 1. If acceptance by a state agency of federal funding is
expected to cause a reduction in certified funds of the General
Revenue Fund of this state within five (5) fiscal years, the
Governor and the agency shall not accept the federal funding.
2. The Governor, State Department of Education, and school
districts shall not accept federal funding that mandates a public
school in this state to teach a specific program, topic, subject,
curriculum, or standard.
3. If federal funding requirements and mandates by an agency
contradict state law, the Governor and state agency shall not accept
the federal funding.
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4. If federal funding requirements and mandates by a state
agency prohibit or hinder the agency from enforcement of internal
controls to prevent fraud and improper payments, the Governor and
agency shall not accept the federal funding.
5. If federal funding requires an agency to establish a new
program, the Governor and state agency shall not accept the federal
funding.
I. OMES shall review federal funding received by state agencies
and shall identify the following:
1. Mandates and requirements;
2. Cost of the mandates and requirements identified in
paragraph 1 of this subsection, including:
a. the costs in the prior five (5) fiscal years,
b. the costs in the current fiscal year, and
c. the estimated costs over the next four (4) fiscal
years;
3. Improper payments for each federal program, including:
a. the total amount of federal and state improper
payments over the prior five (5) fiscal years,
b. the estimated improper payments for the current fiscal
year,
c. the estimated improper payments for the next four (4)
fiscal years,
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d. the improper payment error rate under subparagraphs a,
b, and c of this paragraph, and
e. the reasons for the improper payments; and
4. If a state agency that accepts the federal funding has met
the federal requirements and performance measures of the federal
government.
SECTION 3. This act shall become effective November 1, 2026.
60-2-2579 QD 12/30/2025 11:56:17 PM