House Bill No. by Representative McFarland seeks to establish and reestablish agency ancillary funds, including internal service funds, auxiliary accounts, and enterprise funds, for various state institutions and agencies. The bill outlines the appropriation of funds for the Fiscal Year 2026-2027, specifying that these funds will be used for working capital in business enterprises that provide public, auxiliary, and interagency services. It mandates that all receipts from these operations be deposited into the respective ancillary funds and that expenditures adhere to public bid laws. Additionally, the bill requires that any fund equity from prior year operations be included as a resource for the respective fund, and unexpended cash balances as of June 30, 2027, must be remitted to the state treasurer by August 14, 2027. If an agency's fund is not reestablished in the following year's act, it must liquidate all assets and return any advances by the same date.

The bill also includes provisions for the management of funds, requiring approval from the division of administration and the Joint Legislative Committee on the Budget (JLCB) for any increases in agency revenues. Agencies with appropriations of $30 million or more are mandated to include internal auditing positions in their organizational structure. The commissioner of administration is empowered to adjust performance objectives in the Executive Budget Supporting Document, while the treasurer is tasked with investing excess cash funds. The bill explicitly states that it does not apply to the Department of Culture, Recreation and Tourism, or any agency listed in Schedule 04 of the General Appropriation Act. The proposed law is set to take effect on July 1, 2026.