State Disbursement Process

Currently, the controller is required to adopt fiscal rules requiring the state to make disbursements in the payment of any liability incurred on behalf of the executive branch of the state within 45 days of receiving a correct notice that this liability was incurred. The bill modifies this requirement so that either a correct notice of the state's liability or a demonstration of a good faith effort to provide a correct notice of the state's liability initiates the 45-day period.

A state agency that awards a grant generally requires the grant recipient to access the grant amount awarded by applying for the reimbursement of costs incurred in completing the activity for which the state agency awarded the grant. The bill directs the controller to adopt fiscal rules requiring a state agency to award a nonprofit organization a retainer when entering into a contract with or awarding a grant to a nonprofit organization. The retainer amount must equal at least 35% of the grant amount or 35% of the amount to be disbursed by the state to the nonprofit organization in the first year of a contract between the state and the nonprofit organization. A nonprofit organization is required to spend the retainer amount within a year of the state awarding the grant to or entering into the contract with the nonprofit organization. A nonprofit organization may only expend a retainer on expenses the nonprofit organization incurs in connection with the relevant grant or contract.

The bill also requires a nonprofit organization that receives disbursements from the state to provide the following information to the controller and requires the controller to make that information available upon request:

• The ethnicity of the nonprofit organization's leadership;
• The business structure of the nonprofit organization; and
• Whether the nonprofit organization has previously received a disbursement from the state.
  (Note: This summary applies to this bill as introduced.)