State Agency Payments to Grant Recipients

     Currently, when a an administering state agency awards a grant to a nonprofit organization (grantee), the grantee is generally required to access the grant award by applying for the reimbursement of costs incurred in completing the activity for which the administering state agency awarded the grant.

      The bill allows a state agency, in contracting with any grantee, to dispense up to 25% of the total value of the payments under the contract to the grantee immediately upon executing or renewing the contract. A grantee may only expend money from such a payment on expenses that the grantee incurs in connection with the relevant contract.

      The bill does not prevent a state agency, in contracting with a grantee, from:

• Using a waiver process available through state or federal rules to dispense a percentage of the total value of the payments under a contract to a grantee immediately upon the execution or renewal of the contact; or

       

• For a state agency that, as of the effective date of the bill, already dispenses a percentage of the total value of the payments under a contract to a grantee immediately upon executing or renewing the contract, continuing to dispense the payments as it did before the effective date of the bill.

      A grantee that is paid a percentage of the total value of the payments under a contract with a state agency immediately upon executing or renewing the contract is required to comply with all of the reporting requirements specified in the contract.

      Notwithstanding any provision of law to the contrary, an administering state agency may advance a payment to a grantee only for a state-funded grant subject to certain requirements.

     The administering state agency shall:

• Have an existing process or develop a new process that is approved by the state controller to dispense an advance payment;
• Disclose the availability of advance payment in any notice of a grant funding opportunity, grant solicitation, request for applications, or other announcement issued to prospective grantees;
• Ensure that any advance payment to a grantee is the minimum amount needed to achieve the outcome of actual, immediate cash requirements of the grantee in carrying out the grant objective; and
• Use the office of the state controller's risk assessment tool to determine whether a grantee is high, medium, or low risk and allow advance payment only to a grantee that is determined to be low risk.

     The grantee shall:

• Provide an itemized budget to the administering state agency for the eligible costs that the advance payment will cover, the indirect or other costs that the grantee needs to operate, a spending timeline, and a workplan developed as specified by the administering state agency;
• Submit documentation to support the need for advance payment;
• If required by the administering state agency and stipulated within the grant agreement, obtain insurance in an amount commensurate with the assessed risk determined by the administering state agency ;
• Establish procedures to minimize the amount of time that elapses between the transfer of money and the expenditure of the money by the grantee;
• Provide a progress report to the administering state agency following the expenditure of an advance payment; and
• Disclose certain internal controls to the administering state agency.

     The grantee shall propose the minimum amount needed to achieve the grant objective and the controller of the administering state agency shall review and determine whether to accept the amount or propose an alternative amount. The controller of the administering state agency shall forward advance payment requests to the state controller for approval.

     A grantee shall return to the administering state agency all unused money provided as an advance payment but not expended within the grant agreement timeline and must comply with all of the reporting requirements specified in the grant agreement.

     If an administering state agency or the office of the state controller denies a grantee's request for advance payment, the administering state agency shall provide the grantee with a written explanation of the deficiencies in the application for advance payment that determined the decision to deny the request.

     The bill does not prevent an administering state agency, in providing advance payment to a grantee, from using a waiver process available through fiscal rules adopted by the state controller or rules adopted by a federal governmental entity to dispense a percentage of the total value of the payments under the grant agreement to the grantee immediately upon executing or renewing the grant agreement.

(Note: Italicized words indicate new material added to the original summary; dashes through words indicate deletions from the original summary.)


(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)