Opioid Settlement Funds Accountability and Transparency Act

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Policy Status

  • Type: Model Policy
  • Status: Draft
  • Date Introduced: July 24, 2026

Task Forces

  • Tax and Fiscal Policy Task Force

    • Tags

  • 2026 Annual Meeting

    • Summary

    This model bill creates an oversight framework for opioid settlement funds received by state and local governments from litigation against opioid manufacturers, distributors, and pharmacies. It divides recipients and subrecipients into two tiers based on the federal Single Audit threshold: smaller grantees must certify proper use of funds, provide basic financial records, and report on activities and results; larger grantees must obtain a single or program-specific audit in accordance with Generally Accepted Government Auditing Standards. The Act sets filing deadlines, permits equivalent federal audits to satisfy certain requirements, and establishes penalties for noncompliance, including future grant ineligibility and civil liability for misuse of funds.        
    Draft

    Opioid Settlement Funds Accountability and Transparency Act

    BE IT ENACTED BY THE STATE OF ___________:  

    Section 1. Short Title.  

    This Act shall be known and may be cited as the “Opioid Settlement Fund Accountability and Transparency Act.”  

    Section 2. Purpose.  

    The purpose of this Act is to:   

    • (a) ensure that grants awarded from state opioid settlement funds are used for their intended purposes;  
    • (b) establish proportionate reporting and audit standards for grant recipients; and  
    •  (c) deter misuse of public funds through clear penalties and civil liability for misuse.  

    Section 3. Definitions.  

    1. “Opioid settlement funds” means any fund, account, trust, or other vehicle established by law, court order, or intergovernmental agreement to receive and disburse proceeds from opioid-related litigation settlements on behalf of this State or any of its political subdivisions, including cities and counties.  
    2. “Lead Agency” means the state or local government agency, authority, or entity designated by law, executive order, or the applicable settlement agreement to administer funds from opioid settlements and oversee compliance with grant requirements. Where audit responsibility is assigned by law to a separate entity, such as a state auditor or comptroller, the Lead Agency shall coordinate with that entity in carrying out the requirements of this Act.  
    3.  “Recipient” means any entity that receives a grant directly from the opioid settlement funds.  
    4.  “Subrecipient” means any entity that receives a grant from a recipient for the purpose of carrying out a program or project funded by the opioid settlement funds.  
    5.  “Level I recipient” and “Level II recipient” have the meanings assigned in Section 4(1) of this Act.  

    Section 4. Reporting Requirements.  

    1. For the purposes of this Act, there are two reporting levels established for recipients and subrecipients receiving grants from opioid settlement funds in the State. Reporting levels are based on the allocated amount from all grants disbursed through the opioid settlement funds. The reporting levels are:  
      • (a) Level I – A recipient or subrecipient that receives, holds, uses, or expends grants in an amount less than the dollar amount requiring audit as listed in the Code of Federal Regulations 2 CFR 200.501(a) within its fiscal year. The dollar amount requiring audit listed in 2 CFR 200.501(a) is herein incorporated by reference, including subsequent amendments and editions, and can be accessed free of charge at https://www.ecfr.gov/.  
      • (b) Level II – A recipient or subrecipient that receives, holds, uses, or expends grants in an amount equal to or greater than the dollar amount requiring audit as listed in 2 CFR200.501(a) within its fiscal year. The dollar amount requiring audit listed in 2 CFR 200.501(a)is herein incorporated by reference, including subsequent amendments and editions, and can be accessed free of charge at https://www.ecfr.gov/.  
    2. Agencies shall require all recipients and subrecipients to meet the following reporting standards on an annual basis:  
      • (a) All recipients and subrecipients shall provide to the Lead Agency a certification that grants received or held were used for the purposes for which the grants were awarded.  
      • (b) Level I recipients and subrecipients shall provide an accounting to the Lead Agency of all grants received, held, used, or expended. At a minimum, this accounting shall include copies of recipients’ or subrecipients’ bank statements for the period of the grant, bank reconciliations, and a copy of the resulting general ledger. Recipients may satisfy this requirement narrowly by isolating transactions relating to the receipt, use, or expense of grant funds into a dedicated bank account established for this purpose and segmenting transactions related to the receipt, use, or expense of grant funds within the general ledger.  
      • (c) All recipients and subrecipients shall report on activities and accomplishments undertaken by the recipient, including reporting on any performance measures established in the contract.  
      • (d) Level II recipients and subrecipients shall have a single or program-specific audit prepared and completed in accordance with Generally Accepted Government Auditing Standards, also known as the Yellow Book, which is herein incorporated by reference, including subsequent amendments and editions, and can be accessed free of charge athttps://www.gao.gov/yellowbook. Level I recipients and subrecipients may opt to comply with this provision in lieu of paragraph (b).  
    3. All reports shall be filed with the Lead Agency in the format and method specified by the agency no later than three months after the end of the recipient’s fiscal year, unless the same information is already required through more frequent reporting. Audits shall be provided to the Lead Agency no later than nine months after the end of the recipient’s fiscal year.  
    4. Agency-established reporting requirements to meet the standards set forth in Paragraph (2)(c) of this Act shall be specified in each recipient’s contract.  
    5. Unless prohibited by law, the costs of audits made in accordance with the provisions of this Rule shall be allowable charges to awards from opioid settlement funds. The charges may be considered a direct cost or an allocated indirect cost, as determined in accordance with cost principles outlined in the Code of Federal Regulations, 2 CFR Part 200, which is herein incorporated by reference, including subsequent amendments and editions, and can be accessed free of charge athttps://www.ecfr.gov. The cost of any audit not conducted in accordance with this Chapter shall not be charged to State awards.  
    6. Notwithstanding the provisions of this Act, a recipient may satisfy the reporting requirements of Subparagraph (2)(d) of this Act by submitting a copy of the report required under federal law with respect to the same funds.  

    Section 5. Liability for Misuse of Funds.  

    1. In the event any Level I or Level II recipient fails to comply with the provisions of this Act, the recipient, all natural persons exercising control over the recipient, and any additional persons over which those natural persons may exercise control, shall become ineligible for the future award of any grants or contracts provided by this State.  
    2. If the Lead Agency, in consultation with the attorney general, determines that the natural persons exercising control over a Level I or Level II recipient have utilized grant monies from the opioid settlement funds in a manner substantially different from the purposes for which the grants were awarded, the recipient or the natural persons exercising control over the recipient may be held civilly liable for a restitution of those monies to the opioid settlement funds.