Bill
HB 4138
Provides the state budget for 2026-2027, detailing funding by agency/program, with reporting requirements and protections, to govern general operations, health, education, and serv
HB 4138 Summary — Arizona, 57th Legislature, 2nd Regular Session (2026)
Purpose
- The bill is a comprehensive general appropriations act for fiscal years 2026-2027, detailing appropriations across state agencies, programs, and funds. It specifies funding levels, sources, and some programmatic conditions, reporting requirements, and earmarked transfers.
Main purpose and intent
- Provide the annual state budget by appropriating monies for multiple agencies and programs, establishing operating and capital funding levels, and setting funding sources.
- Include special reporting requirements to Joint Legislative Budget Committee (JLBC) on specific projects, enrollments, and program results.
- Allocate and adjust funding for major programs in health, education, corrections, social services, economic development, and regulatory boards.
Key provisions and changes
1) Statewide funding framework
- Sec. 1 establishes that appropriations come from listed funding sources and that funds are restricted to the specified purposes; appropriation from one source cannot be substituted if unavailable.
2) Agencies and major fund lines (selected highlights)
- Arizona State Board of Accountancy: 14.0 FTE; lump sum $2,257,400 from Board of Accountancy Fund.
- Acupuncture Board of Examiners: 1.0 FTE; $217,000 from Acupuncture Board fund.
- Department of Administration: 549.1 FTE; total $297,824,500 across multiple fund sources (general fund, IT, cyber risk, risk management, etc.), plus special lines (e.g., elected officials’ retirement plan offset, small county assistance).
- Division of School Facilities (Admin): $230,177,500 (general fund) for 17.0 FTE, debt service, building renewal grants, and new school facilities; includes several reporting and timing conditions around facility funding.
- Department of Revenue automation and tax system modernization: $19,756,800 (Automation Projects Fund subaccount), with project requirements to modernize the integrated tax system and provide data access with privacy protections.
- Office of Administrative Hearings: $985,200 (general fund).
- Arizona Health Care Cost Containment System (AHCCCS): $22,798,839,000 operating; detailed line items for administration, eligibility, Medicaid services, ALTCS, behavioral health, hospital payments, DSH, GME, and various program grants; includes mandatory expenditure plans, actuarial reports, and reviews for capitation rate changes.
- Department of Economic Security (DES): $9,887,989,900 total across multiple lines (SNAP, TANF, child care, developmentally disabled programs, long-term care, employment services, etc.), with extensive reporting requirements to JLBC and the governor’s office.
- Arizona Community Colleges: $99,526,200 in general fund across equalization aid, operating aid, STEM/workforce, and rural aid; includes a Diné College remedial education report due Oct 15, 2027.
- Department of Education (Superintendent of Public Instruction): $9,089,939,600 total for formula and non-formula programs; includes onetime supplements for districts and charters, FRPL weight supplements, and guidance on basic state aid and use of permanent fund monies; requires changes to be supported by JLBC review when applicable.
- Arizona Commerce Authority: $12,550,000 total; includes $10,000,000 of withholding tax to be allocated to the Arizona Commerce Authority Fund; requires a December 1, 2026 report on trade offices.
- State Board of Education: $3,462,800 (general fund).
- State Schools for the Deaf and Blind; Commission for the Deaf and Hard of Hearing: funding and fund-source details with reporting requirements.
- State Barbers/Board of Cosmetology; various professional boards: specific FTE and lump sum allocations.
- State Department of Corrections: $1,625,011,200 total; includes personal services, inmate health care, private prison per diem, community corrections, overtime, and IT upgrades; requires expenditure plans and monthly reporting; onetime corrections officer stipend funded in the private prison per diem line.
- Arizona Criminal Justice Commission: $14,216,300 total; distribution rules for victim compensation and state aid funds with JLBC reporting if excess funds are available.
- AHCCCS-related reporting and policy controls: policies on capitation rates, actuarial estimates, and fiscal impact analysis for policy changes affecting health services and providers.
- Many other boards, commissions, and departments are funded with specified lump sums and/or general funds, with targeted reporting and transfer restrictions.
3) Reporting, transparency, and timing
- Numerous sections mandate JLBC reporting on:
- Automation projects progress (quarterly reports within 30 days after each quarter-end).
- State employee transportation for Maricopa County and related cost reports.
- New school facilities, end-of-useful-life projects, and land costs for districts approved by Dec 15, 2025.
- Healthcare system reforms, Medicaid/GME, and behavioral health capacity expansions (Arnold v. Sarn settlement progress).
- KINSHIP stipend program participation and eligibility numbers.
- Juvenile/guardian case management and backlog/open case metrics (DCS requirements).
4) Special allocations and protections
- Several sections designate transfers into or out of specialized funds (Automation Projects Fund, Health and Human Services IT Subaccount, State Surplus Materials Revolving Fund, etc.) with spending protection rules, and some expenditures exempt from lapsing provisions until 2028-2026.
- Some lines specify a minimum or cap on agency spendings, or require approval before moving funds between line items.
Potential impact and targeted beneficiaries
- State agencies and departments receive explicit budget authorization for operations, programs, debt service, and capital projects.
- Health care recipients and providers under AHCCCS will experience funding levels and policies that affect eligibility determinations, services, and capitation rates.
- Students and school districts may benefit from targeted education funding, onetime supplements, and STEM/rural programs, with oversight of basic state aid distributions.
- Local governments and counties receive distribution formulas and earmarks for specific purposes (e.g., police, corrections, rural aid).
- The budget emphasizes accountability and transparency through JLBC reporting and expenditure plans.
Procedural/timeline aspects
- Several reporting deadlines: by Sept 1, 2027 (Diné remedial report), by Mar 31, 2027 (Maricopa county health district report), by Sept 1, 2026 (budget/operational changes for Tucson campus closures), and ongoing quarterly/annual reporting requirements.
- Expenditure plans must be submitted before shifting funds or changing rates, with JLBC and governor’s office review.
- Some funds are exempt from lapsing through 2028/2026.
Note
- This is a high-level summary of a broad, complex appropriations bill. Specific line-item amounts, fund-source splits, and programmatic conditions may have detailed nuances in the full text.
Compiled from official sources — confirm details with the bill’s official record.
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