This bill proposes significant updates to current statutes regarding the appropriation of federal funds in Arizona. Under the new law, effective January 1, 2027, the Legislature would be authorized to appropriate noncustodial federal monies, which are defined as federal funds that allow the state discretion in their use, such as block grants and general revenue sharing. The bill specifies that these noncustodial federal monies do not include funds awarded to universities, the Department of Emergency and Military Affairs, or directly to school districts and community colleges. Additionally, budget units receiving these funds must maintain separate accounts to meet accounting and auditing requirements.

The bill also outlines the procedures for appropriating and managing noncustodial federal monies. It mandates that the Legislature specify the intended use of these funds in each appropriation and allows for lump sum appropriations for unanticipated federal funds when the Legislature is not in session. Furthermore, it establishes that if the amount of noncustodial federal monies received is less than appropriated, the appropriation will be adjusted accordingly, while any excess funds will be credited to the appropriate budget unit. Overall, this legislation aims to enhance the state's ability to manage federal funds effectively while ensuring compliance with both state and federal laws.