(1)Existing law authorizes specified state departments and authorities, upon determination that an advance payment is essential for the effective implementation of a program, to advance to a community-based private nonprofit agency with which it has contracted for the delivery of services funds not exceeding 25% of the annual allocation to be made to the agency during the fiscal year.

Existing law authorizes an administering state agency to advance a payment to a recipient entity, defined to mean a private, nonprofit organization qualified under federal law, subject to meeting specified requirements. Existing law requires the administering state agency to prioritize recipient entities and projects serving disadvantaged, low-income, and under-resourced communities, and to ensure an advance payment to the recipient entity does not exceed 25% of the total grant or contract amount. Existing law requires the recipient entity to satisfy certain minimum requirements, including providing an itemized budget, submitting documentation, as required by the administering state agency, to support the need for advance payment, and demonstrating its current status in good standing as an organization exempt from taxation under federal law. Existing law declares the intent of the Legislature to improve and expand the states existing advance payment practices for state grants and contracts with nonprofits.

This bill would expand the definition of a recipient entity to include a federally recognized Indian tribe whose territorial boundaries lie wholly or partially within the State of California, and any agencies, entities, or arms of the tribe, as applicable, either together or separately. The bill would exempt a tribe from the requirement to demonstrate good standing as an organization exempt from taxation under federal law. The bill would additionally declare the intent of the Legislature to improve and expand the states existing advance payment practices for state grants and contracts with tribes.

(2) Existing law imposes various limitations on emissions of air contaminants for the control of air pollution from vehicular and nonvehicular sources. Existing law generally designates the State Air Resources Board (CARB) as the state agency with the primary responsibility for the control of vehicular air pollution. Existing law authorizes CARB to provide advance payments to grantees of a grant program or project if CARB determines specified conditions are met, including a condition that the grantee agrees not to provide an advance payment to any other entity.

This bill would repeal that condition prohibiting an advance payment to any other entity, and instead would authorize a grantee to make an advance payment to a subrecipient consistent with the above-described law relating to advance payments by state agencies. For purposes of these provisions, the bill would expand the definition of recipient entity to include a local agency or a nongovernmental entity. The bill would exempt a subrecipient that is a local agency or nongovernmental entity, other than a private, nonprofit organization, from the requirement to demonstrate good standing as an organization exempt from taxation under federal law and instead would require the agency or entity to demonstrate good standing with the United States Internal Revenue Service.

(1)Existing law authorizes specified state departments and authorities, upon determination that an advance payment is essential for the effective implementation of a program, to advance to a community-based private nonprofit agency with which it has contracted for the delivery of services funds not exceeding 25% of the annual allocation to be made to the agency during the fiscal year.

Existing law authorizes an administering state agency to advance a payment to a recipient entity, defined to mean a private, nonprofit organization qualified under federal law, subject to meeting specified requirements. Existing law requires the administering state agency to prioritize recipient entities and projects serving disadvantaged, low-income, and under-resourced communities, and to ensure an advance payment to the recipient entity does not exceed 25% of the total grant or contract amount. Existing law requires the recipient entity to satisfy certain minimum requirements, including providing an itemized budget, submitting documentation, as required by the administering state agency, to support the need for advance payment, and demonstrating its current status in good standing as an organization exempt from taxation under federal law. Existing law declares the intent of the Legislature to improve and expand the states existing advance payment practices for state grants and contracts with nonprofits.

This bill would expand the definition of a recipient entity to include a federally recognized Indian tribe whose territorial boundaries lie wholly or partially within the State of California, and any agencies, entities, or arms of the tribe, as applicable, either together or separately. The bill would exempt a tribe from the requirement to demonstrate good standing as an organization exempt from taxation under federal law. The bill would additionally declare the intent of the Legislature to improve and expand the states existing advance payment practices for state grants and contracts with tribes.

(2) Existing law imposes various limitations on emissions of air contaminants for the control of air pollution from vehicular and nonvehicular sources. Existing law generally designates the State Air Resources Board (CARB) as the state agency with the primary responsibility for the control of vehicular air pollution. Existing law authorizes CARB to provide advance payments to grantees of a grant program or project if CARB determines specified conditions are met, including a condition that the grantee agrees not to provide an advance payment to any other entity.

This bill would repeal that condition prohibiting an advance payment to any other entity, and instead would authorize a grantee to make an advance payment to a subrecipient consistent with the above-described law relating to advance payments by state agencies. For purposes of these provisions, the bill would expand the definition of recipient entity to include a local agency or a nongovernmental entity. The bill would exempt a subrecipient that is a local agency or nongovernmental entity, other than a private, nonprofit organization, from the requirement to demonstrate good standing as an organization exempt from taxation under federal law and instead would require the agency or entity to demonstrate good standing with the United States Internal Revenue Service.

(1)Existing law authorizes specified state departments and authorities, upon determination that an advance payment is essential for the effective implementation of a program, to advance to a community-based private nonprofit agency with which it has contracted for the delivery of services funds not exceeding 25% of the annual allocation to be made to the agency during the fiscal year.

Existing law authorizes an administering state agency to advance a payment to a recipient entity, defined to mean a private, nonprofit organization qualified under federal law, subject to meeting specified requirements. Existing law requires the administering state agency to prioritize recipient entities and projects serving disadvantaged, low-income, and under-resourced communities, and to ensure an advance payment to the recipient entity does not exceed 25% of the total grant or contract amount. Existing law requires the recipient entity to satisfy certain minimum requirements, including providing an itemized budget, submitting documentation, as required by the administering state agency, to support the need for advance payment, and demonstrating its current status in good standing as an organization exempt from taxation under federal law. Existing law declares the intent of the Legislature to improve and expand the states existing advance payment practices for state grants and contracts with nonprofits.

This bill would include within the definition of a recipient entity, a federally recognized Indian tribe whose territorial boundaries lie wholly or partially within the State of California, and any agencies, entities, or arms of the tribe, as applicable, either together or separately. The bill would exempt a tribe from the requirement to demonstrate good standing as an organization exempt from taxation under federal law. The bill would additionally declare the intent of the Legislature to improve and expand the states existing advance payment practices for state grants and contracts with tribes.

Existing law authorizes specified state departments and authorities, upon determination that an advance payment is essential for the effective implementation of a program, to advance to a community-based private nonprofit agency with which it has contracted for the delivery of services funds not exceeding 25% of the annual allocation to be made to the agency during the fiscal year.

Existing law authorizes an administering state agency to advance a payment to a recipient entity, defined to mean a private, nonprofit organization qualified under federal law, subject to meeting specified requirements. Existing law requires the administering state agency to prioritize recipient entities and projects serving disadvantaged, low-income, and under-resourced communities, and to ensure an advance payment to the recipient entity does not exceed 25% of the total grant or contract amount. Existing law requires the recipient entity to satisfy certain minimum requirements, including providing an itemized budget, submitting documentation, as required by the administering state agency, to support the need for advance payment, and demonstrating its current status in good standing as an organization exempt from taxation under federal law. Existing law declares the intent of the Legislature to improve and expand the states existing advance payment practices for state grants and contracts with nonprofits.

This bill would include within the definition of a recipient entity, a federally recognized Indian tribe whose territorial boundaries lie wholly or partially within the State of California, and any agencies, entities, or arms of the tribe, as applicable, either together or separately. The bill would exempt a tribe from the requirement to demonstrate good standing as an organization exempt from taxation under federal law. The bill would additionally declare the intent of the Legislature to improve and expand the states existing advance payment practices for state grants and contracts with tribes.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 3017

Author:(Hart, et al.)

As Amended Ver:August 6, 2024

Majority vote

SUMMARY

This bill authorizes a state agency administering a grant program to provide for advance payments to a federally recognized Indian tribe and, subject to certain conditions, authorizes a grantee to make an advance payment to a sub-recipient, as specified.

This bill:

1. Expands, for the purposes of advance payments, the meaning of "recipient entity" to include a federally recognized Indian tribe whose territorial boundaries lie wholly or partially within the State of California, and any agencies, entities, or arms of the tribe, as applicable, either together or separately.
2. Exempts a tribe from the requirement to demonstrate good standing as an organization exempt from taxation under federal law, as specified.
3. Authorizes a grantee to provide moneys from an advance payment to sub-recipients for purposes of reimbursement or advance payment pursuant to the grant program requirements or contract, as specified.
4. Includes in the definition of "recipient entity" a local agency or a nongovernmental entity, as specified.
5. Specifies that if the sub-recipient is a local agency or a nongovernmental entity, other than a private, nonprofit organization, the sub-recipient shall not be subject to specified requirements but instead shall demonstrate good standing with the United States Internal Revenue Service (IRS).
6. Declares the intent of the Legislature to improve and expand the state's existing advance payment practices for state grants and contracts with tribes.

Senate Amendments

1. Authorize a grantee to provide moneys from an advance payment to sub-recipients for purposes of reimbursement or advance payment pursuant to the grant program requirements or contract, as specified.
2. Expand the definition of "recipient entity" to include a local agency or a nongovernmental entity.
3. Exempt a sub-recipient that is a local agency or nongovernmental entity, other than a private, nonprofit organization, from the requirement to demonstrate good standing as an organization exempt from taxation under federal law and instead would require the agency or entity to demonstrate good standing with the IRS.

COMMENTS

Background.

In order to provide Californians with a wide range of vital services, nonprofit organizations consistently stress the significance of a solid partnership with the state. These services include educational programs, health and human services, housing assistance, emergency management activities, and food security initiatives. Nonprofits have stated that "advance payments play a critical role in expanding opportunities to a more diverse base of nonprofits and supporting financial stability for many more. Because many state grants and contracts are reimbursement-based, nonprofit partners resort to taking out lines of credit or loans to start-up services. For nonprofits that take on the financial risk of a contract for which payments can take multiple months to receive from the state or third-party administrator, they have to 'float' the funds, often times putting at risk other programs, or when securing a line of credit, never being able to cover the cost of the interest associated with these financial options.

In relation to this bill, there are 109 federally-recognized tribes in California, and more than 40 tribes have applied for federal status. A large number of state and federal grants are reimbursement based, which means that the recipient of the grant must first advance the funds before requesting reimbursement from the granting body. For example, some California Department of Transportation (Caltrans), American Indian Education, and the California Governor's Office of Emergency Services (Cal OES) grants require tribes to use tribal funds to initiate work. Additionally, initial work oftentimes requires the procurement of consultants or contractors, purchasing of materials and equipment, staff recruitment, and other related costs. While that works for large businesses, many tribes must support their membership either with direct payments or providing employment opportunities.

While there are some very successful gaming tribes in the state, most tribes are truly disadvantaged communities who need the help of both federal and state governmental aid. Many tribes have limited water and electricity access and lack the resources to build healthy, thriving, and resilient communities for all. According to a 2019 report from the California Coalition for Rural Housing and Rural Community Assistance Corporation, 32.5 percent of tribal residents lived below the federal poverty rate, split nearly in half by those with incomes less than half of the poverty level and those between 50 percent and 99.9 percent of the poverty level. The rate of tribal poverty was more than twice the rest of the state. And according to Census Bureau statistics, the median income for all California households was $47,493, whereas the median income for the American Indian/Alaskan Native population was $36,547.

This bill builds off the pilot language put in place by AB 156 (Committee on Budget, Statutes of 2022) and AB 590 (Hart, Statutes of 2023) that set in statute the authority for administering agencies to implement advance payments for all grants and contracts with nonprofits. The signing of AB 156 followed Governor Newsom's Executive Order directing state agencies and departments to take action to embed and operationalize equity considerations in their mission, policies, and programs.

A 2017 analysis by the Strategic Growth Council showed that grant applicants who don't already have technical assistance and capacity-building support don't compete for funding as well as applicants with these types of resources. Recent legislation has helped California Native American Tribal and under-resourced communities by reducing administrative barriers and providing support targeted structures to increase access to state funding

The main distinction between this bill and AB 590 is that AB 3017 would include federally recognized Indian tribes whose borders are entirely or partially within the State of California, as well as any agencies, entities, or arms of the tribe, as applicable, either jointly or separately, under the definition of a recipient entity. This bill also exempts a tribe from the requirement to demonstrate good standing as an organization exempt from taxation under federal law. The bill would additionally declare the intent of the Legislature to improve and expand the state's existing advance payment practices for state grants and contracts with tribes.

In summary, this bill aims to empower tribes economically, recognize their sovereignty, and foster collaboration between tribal governments and the State of California.

According to the Author

According to the author's office, "this bill will improve the State's existing framework for providing advance payments and ensure equitable access to state grants and contracts for Tribal governments. The bill will allow State agencies to provide up to 25% of contracts and grants upfront to Tribal governments. The measure will remove a significant funding barrier, help strengthen the partnership between California and Tribal governments, and create successful benefit programs for Tribal members and their families."

Arguments in Support

In support of the bill, the Santa Ynez Band of Chumash Indians writes that, "[m]any state and federal grants are reimbursement based, meaning the grant recipient must advance the funds first and then apply for reimbursement from the granting agency. For example, some CalTrans, American Indian Education, and CalOES grants require tribes to use tribal funds to initiate work. Additionally, initial work oftentimes requires the procurement of consultants or contractors, purchasing of materials and equipment, staff recruitment, and other related costs. While that works for large businesses, many tribes must support their membership either with direct payments or providing employment opportunities."

Further, "[w]hile there are a few very successful gaming tribes, most tribes are truly disadvantaged communities who need the help of both federal and state governmental aid. According to a 2019 report from the California Coalition for Rural Housing and Rural Community Assistance Corporation, 32.5 percent of tribal residents lived below the federal poverty rate, split nearly in half by those with incomes less than half of the poverty level and those between 50 percent and 99.9 percent of the poverty level. The rate of tribal poverty was more than twice the rest of the state. And according to Census Bureau statistics, the median income for all California households was $47,493, whereas the median income for the American Indian/Alaskan Native population was $36,547."

Arguments in Opposition

None on file

FISCAL COMMENTS

According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, negligible state costs.

VOTES:

ASM GOVERNMENTAL ORGANIZATION: 21-0-1

YES: Blanca Rubio, Lackey, Addis, Bains, Bryan, Davies, Dixon, Gabriel, Gipson, Haney, Jones-Sawyer, Low, McKinnor, Pacheco, Papan, Jim Patterson, Ramos, Soria, Waldron, Valencia, Wallis

ABS, ABST OR NV: Cervantes

ASM APPROPRIATIONS: 14-0-1

YES: Wicks, Sanchez, Arambula, Bryan, Calderon, Wendy Carrillo, Dixon, Mike Fong, Grayson, Haney, Hart, Jim Patterson, Pellerin, Ta

ABS, ABST OR NV: Villapudua

ASSEMBLY FLOOR: 73-0-7

YES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Juan Carrillo, Wendy Carrillo, Cervantes, Chen, Connolly, Davies, Dixon, Essayli, Mike Fong, Vince Fong, Friedman, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Luz Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Wicks, Wilson, Wood, Zbur

ABS, ABST OR NV: Calderon, Megan Dahle, Flora, Low, Mathis, Weber, Robert Rivas

SENATE FLOOR: 37-0-3

YES: Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Grove, Hurtado, Jones, Laird, Limón, McGuire, Menjivar, Min, Nguyen, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Wahab, Wiener, Wilk

ABS, ABST OR NV: Allen, Newman, Umberg

UPDATED

VERSION: August 6, 2024

CONSULTANT: Eric Johnson / G.O. / (916) 319-2531 FN: 0004129

 CONSENT  

Bill No: AB 3017

Author: Hart (D), Cervantes (D), Ramos (D) and Blanca Rubio (D)

Amended: 8/6/24

Vote: 21

SENATE GOVERNMENTAL ORG. COMMITTEE: 12-0, 5/28/24

AYES: Dodd, Wilk, Alvarado-Gil, Archuleta, Glazer, Jones, Nguyen, Padilla, Portantino, Roth, Seyarto, Smallwood-Cuevas

NO VOTE RECORDED: Ashby, Bradford, Ochoa Bogh, Rubio

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 73-0, 5/2/24 (Consent) - See last page for vote

SUBJECT: State-funded assistance grants and contracts: advance payments

SOURCE: Santa Ynez Band of Chumash Indians

DIGEST:

This bill authorizes a state agency administering a grant program to provide for advance payments to a federally recognized Indian tribe and, subject to certain conditions, authorizes a grantee to make an advance payment to a sub-recipient, as specified.

ANALYSIS:

Existing law:

1. Authorizes specified state departments and authorities, upon determination that an advance payment is essential for the effective implementation of a program, to advance to a community-based private nonprofit agency with which it has contracted for the delivery of services funds not exceeding 25 percent of the annual allocation to be made to the agency during the fiscal year.
2. Authorizes an administering state agency to advance a payment to a recipient entity, as specified, and requires the administering state agency to prioritize recipient entities and projects serving disadvantaged, low-income, and under-resourced communities, and to ensure an advance payment to the recipient entity does not exceed 25 percent of the total grant or contract amount.
   
3. Requires the recipient entity to satisfy certain minimum requirements, including providing an itemized budget, submitting documentation, as required by the administering state agency, to support the need for advance payment, and demonstrating its current status in good standing as an organization exempt from taxation under federal law.
4. Imposes various limitations on emissions of air contaminants for the control of air pollution form vehicular and non-vehicular sources and generally designates the State Air Resources Board (CARB) as the state agency with the primary responsibility for the control of vehicular air pollution.
5. Authorizes CARB to provide advance payments to grantees of a grant program or project if CARB determines specified conditions are met, including a condition that the grantee agrees not to provide an advance payment to any other entity.
6. Defines “recipient entity” to mean a private, nonprofit organization that qualifies under the Federal Internal Revenue Code, as specified.
7. Declares the intent of the Legislature to improve and expand the state’s existing advance payment practices for state grants and contracts with nonprofits.

This bill:

1. Expands, for the purposes of advance payments, the meaning of “recipient entity” to include a federally recognized Indian tribe whose territorial boundaries lie wholly or partially within the State of California, and any agencies, entities, or arms of the tribe, as applicable, either together or separately.
2. Exempts a tribe from the requirement to demonstrate good standing as an organization exempt from taxation under federal law, as specified.
3. Authorizes a grantee to provide moneys from an advance payment to sub-recipients for purposes of reimbursement or advance payment pursuant to the grant program requirements or contract, as specified.
4. Includes in the definition of “recipient entity” a local agency or a nongovernmental entity, as specified.
5. Specifies that if the sub-recipient is a local agency or a nongovernmental entity, other than a private, nonprofit organization, the sub-recipient shall not be subject to specified requirements but instead shall demonstrate good standing with the United States Internal Revenue Service (IRS).
6. Declares the intent of the Legislature to improve and expand the state’s existing advance payment practices for state grants and contracts with tribes.

Background

Author Statement. According to the author’s office, “Assembly Bill 3017 will improve the State’s existing framework for providing advance payments and ensure equitable access to state grants and contracts for Tribal governments. The bill will allow State agencies to provide up to 25% of contracts and grants upfront to Tribal governments. The measure will remove a significant funding barrier, help strengthen the partnership between California and Tribal governments, and create successful benefit programs for Tribal members and their families.”

Advanced Payment Pilot. As part of the state budget two years ago, AB 156 (Committee on Budget, Chapter 569, Statutes of 2022) authorizes, until July 1, 2025, state agencies administering specified programs to advance payments to local agencies, nongovernmental entities, and other state agencies if certain criteria are met, including requiring advance payment recipients to provide an itemized budget, spending timeline, and work plan. The bill limits the advance payment to a local agency or nongovernmental entity to 25 percent of the total grant amount awarded to that recipient, unless the administering state agency determines that the project requires a larger advance.

The pilot program requires the recipient or any sub-recipients to cooperate with audits by the Department of Finance (DOF) related to the advanced payments. It also requires the administering state agency to prioritize local agency or nongovernmental entity recipients and projects serving disadvantaged, low-income, and under-resourced communities or organizations with modest reserves and potential cash flow problems. Additionally, the pilot program requires the local agency and nongovernmental entity recipients to submit additional documentation and progress reports on the spend-down of funds, and to demonstrate good standing with the IRS. Finally, the bill requires the DOF, by January 10, 2025, to report to the Legislature on this program.

Advance Payments for State Grants and Contracts. In order to provide Californians with a wide range of vital services, nonprofit organizations consistently stress the significance of a solid partnership with the state. These services include educational programs, health and human services, housing assistance, emergency management activities, and food security initiatives.

Nonprofits have stated that advance payments play a critical role in expanding opportunities to a more diverse base of nonprofits and supporting financial stability for many more. Because many state grants and contracts are reimbursement-based, nonprofit partners resort to taking out lines of credit or loans to start-up services. For nonprofits that take on the financial risk of a contract for which payments can take multiple months to receive from the state or third-party administrator, they have to “float” the funds, often times putting at risk other programs, or when securing a line of credit, never being able to cover the cost of the interest associated with these financial options.

In relation to this bill, there are 109 federally-recognized tribes in California, and more than 40 tribes have applied for federal status. A large number of state and federal grants are reimbursement based, which means that the recipient of the grant must first advance the funds before requesting reimbursement from the granting body. For example, some California Department of Transportation (Caltrans), American Indian Education, and the California Governor's Office of Emergency Services (Cal OES) grants require tribes to use tribal funds to initiate work. Additionally, initial work oftentimes requires the procurement of consultants or contractors, purchasing of materials and equipment, staff recruitment, and other related costs. While that works for large businesses, many tribes must support their membership either with direct payments or providing employment opportunities.

While there are some very successful gaming tribes in the state, most tribes are truly disadvantaged communities who need the help of both federal and state governmental aid. Many tribes have limited water and electricity access and lack the resources to build healthy, thriving, and resilient communities for all. According to a 2019 report from the California Coalition for Rural Housing and Rural Community Assistance Corporation, 32.5 percent of tribal residents lived below the federal poverty rate, split nearly in half by those with incomes less than half of the poverty level and those between 50 percent and 99.9 percent of the poverty level. The rate of tribal poverty was more than twice the rest of the state. And according to Census Bureau statistics, the median income for all California households was $47,493, whereas the median income for the American Indian/Alaskan Native population was $36,547.

This bill builds off the pilot language put in place by AB 156 (Committee on Budget, Chapter 569, Statutes of 2022) and AB 590 (Hart, Chapter 535, Statutes of 2023) that set in statute the authority for administering agencies to implement advance payments for all grants and contracts with nonprofits. The signing of AB 156 followed Governor Newsom’s Executive Order directing state agencies and departments to take action to embed and operationalize equity considerations in their mission, policies, and programs.

A 2017 analysis by the Strategic Growth Council showed that grant applicants who don’t already have technical assistance and capacity-building support don’t compete for funding as well as applicants with these types of resources. Recent legislation has helped California Native American Tribal and under-resourced communities by reducing administrative barriers and providing support targeted structures to increase access to state funding.

The main distinction between this bill and AB 590 is that this bill would include federally recognized Indian tribes whose borders are entirely or partially within the State of California, as well as any agencies, entities, or arms of the tribe, as applicable, either jointly or separately, under the definition of a recipient entity. This bill also exempts a tribe from the requirement to demonstrate good standing as an organization exempt from taxation under federal law. The bill additionally declares the intent of the Legislature to improve and expand the state’s existing advance payment practices for state grants and contracts with tribes.

In summary, this bill aims to empower tribes economically, recognize their sovereignty, and foster collaboration between tribal governments and the State of California.

Federally Recognized Tribes. A federally recognized tribe is an American Indian or Alaska Native tribal entity that is recognized as having a government-to-government relationship with the United States, with the responsibilities, powers, limitations, and obligations attached to that designation, and is eligible for funding and services from the Bureau of Indian Affairs.

Furthermore, federally recognized tribes are recognized as possessing certain inherent rights of self-government (i.e., tribal sovereignty) and are entitled to receive certain federal benefits, services, and protections because of their special relationship with the United States.

Related/Prior Legislation

SB 1246 (Limón, 2024) for the purposes of the California Prompt Payment Act (PPA), expands the definition of the term “grant” to additionally mean a signed final agreement between any state agency and a nonprofit organization, deletes existing nonprofit penalty exceptions for contracts less than $500,000, and requires a state agency that is disputing an invoice from a nonprofit organization to pay, within 45 calendar days from receipt of the invoice, the undisputed portion of the invoice, as specified. (Pending in the Assembly Appropriations Committee)

AB 2322 (Hart, 2024) streamlines the process of applying for and receiving small state grants, particularly those not exceeding $20,000 and with a duration of less than 12 months, and requires the creation of a more accessible and equitable grant application process, as specified. The bill also requires the expansion of the California Grants Portal (a project by the California State Library) to include specified information about such grants. (Pending in the Senate Appropriations Committee)

SB 336 (Umberg, 2023) requires a state agency administering a grant program to reimburse a grantee's indirect costs at one of three specified rates requested by the grantee in its state grant program application. (Pending on the Assembly floor)

SB 557 (Limón, 2023) would have expanded the definition of a grant for the purposes of the PPA requiring timely payments to include nonprofits by changing what is considered a grant and sets a specific monetary threshold of $250 or five percent of the invoiced amount (whichever is lower) for when a state agency can dispute a bill related to property or services delivered. (Vetoed by Governor Newsom)

AB 590 (Hart, Chapter 535, Statutes of 2023) authorized a state agency administering a grant program to provide for advance payments to a recipient 501(c)(3) nonprofit organization, as specified.

AB 156 (Committee on Budget, Chapter 569, Statutes of 2022) authorized, until July 1, 2025, state agencies administering specified programs to advance payments to local agencies, nongovernmental entities, and other state agencies if certain criteria are met including requiring advance payment recipients to provide an itemized budget, spending timeline, and work plan.

AB 1776 (Gallagher, Chapter 455, Statutes of 2022) added a resource conservation district (RCD) to the list of entities entitled to a late payment penalty from the state, as specified, and exempted contracts with RCDs from specified extension provisions, as specified.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT: (Verified 8/9/24)

Santa Ynez Band of Chumash Indians (Source)

Cahuilla Band of Indians

California Nations Indian Gaming Association
California Tribal Business Alliance
Enterprise Rancheria
Federated Indians of Graton Rancheria
Rincon San Luiseno Band of Indians; the

San Manuel Band of Mission Indians
Sycuan Band of The Kumeyaay Nation

Tule River Indian Tribe of California
Yurok Tribe

OPPOSITION: (Verified 8/9/24)

None received

ARGUMENTS IN SUPPORT: In support of the bill, the Santa Ynez Band of Chumash Indians writes that, “[m]any state and federal grants are reimbursement based, meaning the grant recipient must advance the funds first and then apply for reimbursement from the granting agency. For example, some CalTrans, American Indian Education, and CalOES grants require tribes to use tribal funds to initiate work. Additionally, initial work oftentimes requires the procurement of consultants or contractors, purchasing of materials and equipment, staff recruitment, and other related costs. While that works for large businesses, many tribes must support their membership either with direct payments or providing employment opportunities.”

Further, “[w]hile there are a few very successful gaming tribes, most tribes are truly disadvantaged communities who need the help of both federal and state governmental aid. According to a 2019 report from the California Coalition for Rural Housing and Rural Community Assistance Corporation, 32.5 percent of tribal residents lived below the federal poverty rate, split nearly in half by those with incomes less than half of the poverty level and those between 50 percent and 99.9 percent of the poverty level. The rate of tribal poverty was more than twice the rest of the state. And according to Census Bureau statistics, the median income for all California households was $47,493, whereas the median income for the American Indian/Alaskan Native population was $36,547.”

ASSEMBLY FLOOR: 73-0, 5/2/24

AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Juan Carrillo, Wendy Carrillo, Cervantes, Chen, Connolly, Davies, Dixon, Essayli, Mike Fong, Vince Fong, Friedman, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Luz Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Wicks, Wilson, Wood, Zbur

NO VOTE RECORDED: Calderon, Megan Dahle, Flora, Low, Mathis, Weber, Robert Rivas

Prepared by: Brian Duke / G.O. / (916) 651-1530

8/14/24 14:03:14

**** END ****

SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION

Senator Bill Dodd

Chair

2023 - 2024 Regular

Bill No: 3017 Hearing Date: 5/28/2024

SUBJECT: State-funded assistance grants and contracts: advance payments: tribes

DIGEST: This bill authorizes a state agency administering a grant program to provide for advance payments to a federally recognized Indian tribe, as specified.

ANALYSIS:

Existing law:

1. Authorizes specified state departments and authorities, upon determination that an advance payment is essential for the effective implementation of a program, to advance to a community-based private nonprofit agency with which it has contracted for the delivery of services funds not exceeding 25 percent of the annual allocation to be made to the agency during the fiscal year.
2. Authorizes an administering state agency to advance a payment to a recipient entity, as specified, and requires the administering state agency to prioritize recipient entities and projects serving disadvantaged, low-income, and under-resourced communities, and to ensure an advance payment to the recipient entity does not exceed 25 percent of the total grant or contract amount.
3. Requires the recipient entity to satisfy certain minimum requirements, including providing an itemized budget, submitting documentation, as required by the administering state agency, to support the need for advance payment, and demonstrating its current status in good standing as an organization exempt from taxation under federal law.
4. Defines “recipient entity” to mean a private, nonprofit organization that qualifies under the Federal Internal Revenue Code, as specified.
5. Declares the intent of the Legislature to improve and expand the state’s existing advance payment practices for state grants and contracts with nonprofits.

This bill:

1. For the purposes of advance payments, expands the meaning of “recipient entity” to include a federally recognized Indian tribe whose territorial boundaries lie wholly or partially within the State of California, and any agencies, entities, or arms of the tribe, as applicable, either together or separately.
2. Exempts a tribe from the requirement to demonstrate good standing as an organization exempt from taxation under federal law, as specified.
3. Additionally declares the intent of the Legislature to improve and expand the state’s existing advance payment practices for state grants and contracts with tribes.

Background

Author Statement. According to the author’s office, “Assembly Bill 3017 will improve the State’s existing framework for providing advance payments and ensure equitable access to state grants and contracts for Tribal governments. The bill will allow State agencies to provide up to 25% of contracts and grants upfront to Tribal governments. The measure will remove a significant funding barrier, help strengthen the partnership between California and Tribal governments, and create successful benefit programs for Tribal members and their families.”

Advanced Payment Pilot. As part of the state budget two years ago, AB 156 (Chapter 569, Statutes of 2022) authorizes, until July 1, 2025, state agencies administering specified programs to advance payments to local agencies, nongovernmental entities, and other state agencies if certain criteria are met, including requiring advance payment recipients to provide an itemized budget, spending timeline, and work plan. That bill limits the advance payment to a local agency or nongovernmental entity to 25 percent of the total grant amount awarded to that recipient, unless the administering state agency determines that the project requires a larger advance.

The pilot program requires the recipient or any sub-recipients to cooperate with audits by the Department of Finance (DOF) related to the advanced payments. It also requires the administering state agency to prioritize local agency or nongovernmental entity recipients and projects serving disadvantaged, low-income, and under-resourced communities or organizations with modest reserves and potential cash flow problems. Additionally, the program requires the local agency and nongovernmental entity recipients to submit additional documentation and progress reports on the spend-down of funds, and to demonstrate good standing with the federal Internal Revenue Service. Finally, the bill requires the DOF, by January 10, 2025, to report to the Legislature on this program.

Advance Payments for State Grants and Contracts. In order to provide Californians with a wide range of vital services, nonprofit organizations consistently stress the significance of a solid partnership with the state. These services include educational programs, health and human services, housing assistance, emergency management activities, and food security initiatives.

Nonprofits have stated that advance payments play a critical role in expanding opportunities to a more diverse base of nonprofits and supporting financial stability for many more. Because many state grants and contracts are reimbursement-based, nonprofit partners resort to taking out lines of credit or loans to start-up services. For nonprofits that take on the financial risk of a contract for which payments can take multiple months to receive from the state or third-party administrator, they have to “float” the funds, often times putting at risk other programs, or when securing a line of credit, never being able to cover the cost of the interest associated with these financial options.

In relation to this bill, there are 109 federally-recognized tribes in California, and more than 40 tribes have applied for federal status. A large number of state and federal grants are reimbursement based, which means that the recipient of the grant must first advance the funds before requesting reimbursement from the granting body. For example, some California Department of Transportation (Caltrans), American Indian Education, and the California Governor's Office of Emergency Services (Cal OES) grants require tribes to use tribal funds to initiate work. Additionally, initial work oftentimes requires the procurement of consultants or contractors, purchasing of materials and equipment, staff recruitment, and other related costs. While that works for large businesses, many tribes must support their membership either with direct payments or providing employment opportunities.

While there are some very successful gaming tribes in the state, most tribes are truly disadvantaged communities who need the help of both federal and state governmental aid. Many tribes have limited water and electricity access and lack the resources to build healthy, thriving, and resilient communities for all. According to a 2019 report from the California Coalition for Rural Housing and Rural Community Assistance Corporation, 32.5 percent of tribal residents lived below the federal poverty rate, split nearly in half by those with incomes less than half of the poverty level and those between 50 percent and 99.9 percent of the poverty level. The rate of tribal poverty was more than twice the rest of the state. And according to Census Bureau statistics, the median income for all California households was $47,493, whereas the median income for the American Indian/Alaskan Native population was $36,547.

AB 3017 builds off the pilot language put in place by AB 156 (Committee on Budget, Statutes of 2022) and AB 590 (Hart, Statutes of 2023) that set in statute the authority for administering agencies to implement advance payments for all grants and contracts with nonprofits. The signing of AB 156 followed Governor Newsom’s Executive Order directing state agencies and departments to take action to embed and operationalize equity considerations in their mission, policies, and programs.

A 2017 analysis by the Strategic Growth Council showed that grant applicants who don’t already have technical assistance and capacity-building support don’t compete for funding as well as applicants with these types of resources. Recent legislation has helped California Native American Tribal and under-resourced communities by reducing administrative barriers and providing support targeted structures to increase access to state funding.

The main distinction between this bill and AB 590 is that AB 3017 would include federally recognized Indian tribes whose borders are entirely or partially within the State of California, as well as any agencies, entities, or arms of the tribe, as applicable, either jointly or separately, under the definition of a recipient entity. This bill also exempts a tribe from the requirement to demonstrate good standing as an organization exempt from taxation under federal law. The bill would additionally declare the intent of the Legislature to improve and expand the state’s existing advance payment practices for state grants and contracts with tribes.

In summary, AB 3017 aims to empower tribes economically, recognize their sovereignty, and foster collaboration between tribal governments and the State of California.

Federally Recognized Tribes. A federally recognized tribe is an American Indian or Alaska Native tribal entity that is recognized as having a government-to-government relationship with the United States, with the responsibilities, powers, limitations, and obligations attached to that designation, and is eligible for funding and services from the Bureau of Indian Affairs.

Furthermore, federally recognized tribes are recognized as possessing certain inherent rights of self-government (i.e., tribal sovereignty) and are entitled to receive certain federal benefits, services, and protections because of their special relationship with the United States.

Prior/Related Legislation

SB 1246 (Limón, 2024) for the purposes of the California Prompt Payment Act (PPA), expands the definition of the term “grant” to additionally mean a signed final agreement between any state agency and a nonprofit organization, deletes existing nonprofit penalty exceptions for contracts less than $500,000, and requires a state agency that is disputing an invoice from a nonprofit organization to pay, within 45 calendar days from receipt of the invoice, the undisputed portion of the invoice, as specified. (Pending on the Senate Floor)

AB 2322 (Hart, 2024) streamlines the process of applying for and receiving small state grants, particularly those not exceeding $20,000 and with a duration of less than 12 months, and requires the creation of a more accessible and equitable grant application process, as specified. The bill also requires the expansion of the California Grants Portal (a project by the California State Library) to include specified information about such grants. (Pending on the Assembly Floor)

SB 336 (Umberg, 2023) requires a state agency administering a grant program to reimburse a grantee's indirect costs at one of three specified rates requested by the grantee in its state grant program application. (Pending on the Assembly floor)

SB 557 (Limon, 2023) would have expanded the definition of a grant for the purposes of the PPA requiring timely payments to include nonprofits by changing what is considered a grant and sets a specific monetary threshold of $250 or five percent of the invoiced amount (whichever is lower) for when a state agency can dispute a bill related to property or services delivered. (Vetoed by Governor Newsom)

AB 590 (Hart, Chapter 535, Statutes of 2023) authorizes a state agency administering a grant program to provide for advance payments to a recipient 501(c)(3) nonprofit organization, as specified.

AB 156 (Committee on Budget, Chapter 569, Statutes of 2022) authorized, until July 1, 2025, state agencies administering specified programs to advance payments to local agencies, nongovernmental entities, and other state agencies if certain criteria are met including requiring advance payment recipients to provide an itemized budget, spending timeline, and work plan.

AB 1776 (Gallagher, Chapter 455, Statutes of 2022) adds a resource conservation district (RCD) to the list of entities entitled to a late payment penalty from the state, as specified, and exempts contracts with RCDs from specified extension provisions, as specified.

AB 2252 (Limon, Chapter 318, Statutes of 2018) the California Grant Information Act of 2018, requires the California State Library to create an internet web portal to provide a centralized location for grant seekers to find state grant opportunities and requires the California State Library to report to the Legislature on the effectiveness of the portal, including, among other things, the utilization rate by state agencies.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT:

Santa Ynez Band of Chumash Indians (Source)

Cahuilla Band of Indians

California Nations Indian Gaming Association
California Tribal Business Alliance
Enterprise Rancheria
Federated Indians of Graton Rancheria
Rincon San Luiseno Band of Indians; the
Sycuan Band of The Kumeyaay Nation
Yurok Tribe

OPPOSITION:

None received

ARGUMENTS IN SUPPORT: In support of the bill, the Santa Ynez Band of Chumash Indians write that, “[m]any state and federal grants are reimbursement based, meaning the grant recipient must advance the funds first and then apply for reimbursement from the granting agency. For example, some CalTrans, American Indian Education, and CalOES grants require tribes to use tribal funds to initiate work. Additionally, initial work oftentimes requires the procurement of consultants or contractors, purchasing of materials and equipment, staff recruitment, and other related costs. While that works for large businesses, many tribes must support their membership either with direct payments or providing employment opportunities.”

Further, “[w]hile there are a few very successful gaming tribes, most tribes are truly disadvantaged communities who need the help of both federal and state governmental aid. According to a 2019 report from the California Coalition for Rural Housing and Rural Community Assistance Corporation, 32.5 percent of tribal residents lived below the federal poverty rate, split nearly in half by those with incomes less than half of the poverty level and those between 50 percent and 99.9 percent of the poverty level. The rate of tribal poverty was more than twice the rest of the state. And according to Census Bureau statistics, the median income for all California households was $47,493, whereas the median income for the American Indian/Alaskan Native population was $36,547.”

Date of Hearing: April 24, 2024

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

ABPCA Bill Id:AB 3017

Author:(Hart) – As Introduced Ver:February 16, 2024

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill adds a federally recognized Native American tribe with territorial boundaries within California to the definition of a “recipient entity” eligible to receive an advance payment of a state grant or contract.

FISCAL EFFECT:

Likely absorbable costs across all state agencies by expanding existing advance payment authorization to tribal government recipients.

When the outcome of a contract is a one-time deliverable, such as a report, advance payments carry additional risks in comparison to contracts providing ongoing deliverables through the duration of the contract. Additionally, to the extent an agency is unable to recover unused or misused advanced funds from a recipient entity, advance payments could result in significant losses of state monies. It is also costly for the state to legally pursue recoupment of payments if the recipient entity fails to perform. However, such risks already exist under the state’s advance payment programs, and will not be significantly increased by the inclusion of tribal governments as a recipient entity.

COMMENTS:

1. Purpose. According to the author, this bill will remove a significant funding barrier for tribal governments by authorizing state agencies to provide up to 25% of contracts and grants upfront, thus strengthening the partnership California and tribal governments and creating successful benefit programs for tribal members. This bill is supported by the Santa Ynez Band of Chumash Indians.
2. Existing Advance Payment Authorizations. Prior to the enactment of AB 590 (Hart), Chapter 535, Statutes of 2023, state law allowed over 20 specified state agencies to provide an advance payment of up to 25% of the annual contract amount to a nonprofit organization contracted for the delivery of services. AB 156 (Committee on Budget), Chapter 569, Statutes of 2022, established, until July 1, 2025, a new pilot program to explore possible improvements to the state’s existing advance payment practices for specified state-funded local assistance grants administered by a small number of state agencies. As part of the pilot program, the Department of Finance (DOF) must prepare, by January 10, 2025, a report on the number of payments advanced, including by program and geographic location, with a summary of any adverse audit findings.

AB 590 more broadly authorized, in perpetuity, any administering state agency to advance 25% of any total grant or contract payment to a recipient 501(c)(3) non-profit entity meeting certain minimum requirements. AB 590 also authorized DOF to audit an administering state agency or recipient entity receiving an advance payment, with DOF generally estimating a per-audit cost of approximately $200,000, to be reimbursed by the relevant state agency. This bill adds tribal governments as a recipient entity eligible to receive advance payment of grants and contracts under the rules established by AB 590, as tribal governments are included as eligible recipients in the ongoing AB 156 pilot program. However, other recipients eligible for advance payments under the AB 156 pilot program, such as local agencies and businesses, would remain ineligible.

Analysis Prepared by: Irene Ho / APPR. / (916) 319-2081

Date of Hearing: April 3, 2024

ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION

Blanca Rubio, Chair

ABPCA Bill Id:AB 3017 (

Author:Hart) – As Introduced Ver:February 16, 2024

SUBJECT: State-funded assistance grants and contracts: advance payments: tribes

SUMMARY: This bill would authorize a state agency administering a grant program to provide for advance payments to a federally recognized Indian tribe whose territorial boundaries lie wholly or partially within the State of California, and any agencies, entities, or arms of the tribe, as applicable, either together or separately, as specified. Specifically, this bill:

1) Declares the intent of the Legislature to improve and expand the state’s existing advance payment practices for state grants and contracts with tribes, as defined.

2) Declares for purposes of this bill, the following definition applies:

a) “Administering state agency” means a state agency that administers a grant program or contract.

b) “Recipient entity” means the following:

a) A federally recognized Indian tribe whose territorial boundaries lie wholly or partially within the State of California, and any agencies, entities, or arms of the tribe, as applicable, either together or separately.

3) Provides the administering state agency may advance a payment to the recipient entity subject to all of the following requirements:

a) Prioritize recipient entities and projects serving disadvantaged, low-income, and under-resourced communities or organizations with modest reserves and potential cashflow problems.

b) Stipulate an advance payment structure and request process within the grant agreement or contract between the administering state agency and the recipient entity.

c) Ensure the advance payment does not exceed 25% of the total grant or contract amount, unless the state agency determines that the project requires a larger advance and the recipient entity provides sufficient justification and documentation for that larger advance.

4) Provides except as provided in c), the recipient entity shall satisfy the following minimum requirements:

a) Provide an itemized budget for the eligible costs the advanced payment will fund, indirect or other costs needed to operate, a spending timeline, and a workplan developed in a form and manner specified by the administering state agency.

b) Submit documentation to support the need for advance payment, as specified.

c) Demonstrate its current status in good standing as an organization exempt from taxation under Section 501(c)(3) of the Internal Revenue Code. This clause shall not apply to tribes.

d) Obtain insurance in an amount commensurate with the assessed risk, if required by the administering state agency and stipulated within the grant agreement or contract.

e) Deposit any funds received as an advance payment into a federally insured account of the recipient entity that provides the ability to track interest earned and withdrawals, as specified.

f) Establish procedures to minimize the amount of time that elapses between the transfer of funds and the expenditure of those funds by the recipient or subrecipient, as specified.

g) Provide progress reports on the expenditure of advanced funds no less than on a quarterly basis and as otherwise required by the administering state agency. All unused funding provided as an advance payment, but not expended within the grant or contract timeline, shall be returned to the state.

h) Provide progress reports, as specified.

5) Provides that recipient entities may provide moneys from the advance payment to subrecipients in accordance with their grant program requirements or contract, as specified. The recipients shall require all entities they subcontract with or award grant moneys to comply with state statutes, regulations, requirements and the terms and conditions of the state award.

6) Provides that advance payments shall be limited to the minimum immediate cash requirements necessary to carry out the purposes of the approved activity, program, or project, as determined by the administering state agency, as specified.

7) Authorizes the Department of Finance (DOF) to audit any state agency subject to the provisions of this bill or any recipient that received an advance payment. The state agency, recipient, or subrecipient shall cooperate fully with the audit.

8) Provides that nothing in this bill shall be construed as limiting, prohibiting, or superseding any existing payment or grantmaking authorizations or powers of state agencies utilizing the provisions of this bill.

EXISTING LAW:

1) Authorizes specified state departments and authorities, upon determination that an advance payment is essential for the effective implementation of a program, to advance to a community-based private nonprofit agency with which it has contracted for the delivery of services funds not exceeding 25% of the annual allocation to be made to the agency during the fiscal year.

2) Authorizes an administering state agency to advance a payment to a recipient entity, defined to mean a private, nonprofit organization that qualifies under Section 501(c)(3) of the Internal Revenue Code, subject to meeting specified requirements.

3) Requires the administering state agency to prioritize recipient entities and projects serving disadvantaged, low-income, and under-resourced communities, and to ensure an advance payment to the recipient entity does not exceed 25% of the total grant or contract amount.

4) Requires the recipient entity to satisfy certain minimum requirements, including providing an itemized budget, submitting documentation, as required by the administering state agency, to support the need for advance payment, and demonstrating its current status in good standing as an organization exempt from taxation under federal law.

5) Allows the Department of Finance or its designee to audit, during or after the conclusion of the term of the grant agreement, any state agency subject to this section or any recipient or subrecipient that received an advance payment under this section. The state agency, recipient, or subrecipient shall cooperate fully with the audit, including, but not limited to, providing access to its staff, books, records, accounts, or other materials, as requested.

6) Establishes a pilot program, which is repealed on July 1, 2025, to explore possible improvements to the state’s existing advance payment practices for state-funded assistance grants.

7) Declares the intent of the Legislature to improve and expand the state’s existing advance payment practices for state grants and contracts with nonprofits.

FISCAL EFFECT: This bill has been keyed fiscal by Legislative Counsel.

COMMENTS:

Purpose of the bill. According to the author’s office, this bill will improve the State’s existing framework for providing advanced payments and ensure equitable access to State grants for Tribal governments. The bill will allow State agencies to provide up to 25% of contracts and grants upfront to Tribal governments. The measure will remove a significant funding barrier, help strengthen the partnership between California and Tribal governments, and create successful benefit programs for Tribal members and their families.

Background.

In order to provide Californians with a wide range of vital services, nonprofit organizations consistently stress the significance of a solid partnership with the state. These services include educational programs, health and human services, housing assistance, emergency management activities, and food security initiatives. Nonprofits have stated that “advance payments play a critical role in expanding opportunities to a more diverse base of nonprofits and supporting financial stability for many more. Because many state grants and contracts are reimbursement-based, nonprofit partners resort to taking out lines of credit or loans to start-up services. For nonprofits that take on the financial risk of a contract for which payments can take multiple months to receive from the state or third-party administrator, they have to ‘float’ the funds, often times putting at risk other programs, or when securing a line of credit, never being able to cover the cost of the interest associated with these financial options.

In relation to this bill, there are 109 federally-recognized tribes in California, and more than 40 tribes have applied for federal status. A large number of state and federal grants are reimbursement based, which means that the recipient of the grant must first advance the funds before requesting reimbursement from the granting body. For example, some California Department of Transportation (Caltrans), American Indian Education, and the California Governor's Office of Emergency Services (Cal OES) grants require tribes to use tribal funds to initiate work. Additionally, initial work oftentimes requires the procurement of consultants or contractors, purchasing of materials and equipment, staff recruitment, and other related costs. While that works for large businesses, many tribes must support their membership either with direct payments or providing employment opportunities.

While there are some very successful gaming tribes in the state, most tribes are truly disadvantaged communities who need the help of both federal and state governmental aid. Many tribes have limited water and electricity access and lack the resources to build healthy, thriving, and resilient communities for all. According to a 2019 report from the California Coalition for Rural Housing and Rural Community Assistance Corporation, 32.5 percent of tribal residents lived below the federal poverty rate, split nearly in half by those with incomes less than half of the poverty level and those between 50 percent and 99.9 percent of the poverty level. The rate of tribal poverty was more than twice the rest of the state. And according to Census Bureau statistics, the median income for all California households was $47,493, whereas the median income for the American Indian/Alaskan Native population was $36,547.

AB 3017 builds off the pilot language put in place by AB 156 (Committee on Budget, Statutes of 2022) and AB 590 (Hart, Statutes of 2023) that set in statute the authority for administering agencies to implement advance payments for all grants and contracts with nonprofits. The signing of AB 156 followed Governor Newsom’s Executive Order directing state agencies and departments to take action to embed and operationalize equity considerations in their mission, policies, and programs.

A 2017 analysis by the Strategic Growth Council showed that grant applicants who don’t already have technical assistance and capacity-building support don’t compete for funding as well as applicants with these types of resources. Recent legislation has helped California Native American Tribal and under-resourced communities by reducing administrative barriers and providing support targeted structures to increase access to state funding.

The main distinction between this bill and AB 590 is that AB 3017 would include federally recognized Indian tribes whose borders are entirely or partially within the State of California, as well as any agencies, entities, or arms of the tribe, as applicable, either jointly or separately, under the definition of a recipient entity. This bill also exempts a tribe from the requirement to demonstrate good standing as an organization exempt from taxation under federal law. The bill would additionally declare the intent of the Legislature to improve and expand the state’s existing advance payment practices for state grants and contracts with tribes.

In summary, AB 3017 aims to empower tribes economically, recognize their sovereignty, and foster collaboration between tribal governments and the State of California.

What is a federally recognized tribe? A federally recognized tribe is an American Indian or Alaska Native tribal entity that is recognized as having a government-to-government relationship with the United States, with the responsibilities, powers, limitations, and obligations attached to that designation, and is eligible for funding and services from the Bureau of Indian Affairs.

Furthermore, federally recognized tribes are recognized as possessing certain inherent rights of self-government (i.e., tribal sovereignty) and are entitled to receive certain federal benefits, services, and protections because of their special relationship with the United States.

In support. The sponsor of this bill, the Santa Ynez Band of Chumash Indians states that AB 3017 aims to enhance the state’s existing advance payment practices for state grants and contracts. Specifically, it focuses on state-funded assistance grants and contracts for federally-recognized tribes. The bill allows state agencies to provide tribal governments with the opportunity to receive up to 25% of contracts and grants upfront. This bill will help to ensure that tribal communities have fair and equitable access to state grants and contracts. Advancing state agency grant funds will allow disadvantaged tribes to set up the infrastructure to create successful benefit programs for their tribal members and their families.

Proponents point out that with upfront investment, tribes may start and sustain vital projects including infrastructure development, education, healthcare, and cultural preservation. The rapid access to funds will cut administrative costs associated with waiting for reimbursements or subsequent payments. Tribes will be able to focus more on program implementation and less on financial logistics.

Related legislation. AB 2322 (Hart) of 2024. This bill would streamline the process of applying for and receiving small state grants, particularly those not exceeding $20,000 and with a duration of less than 12 months, and requires the creation of a more accessible and equitable grant application process, as specified. The bill also requires the expansion of the California Grants Portal (a project by the California State Library) to include specified information about such grants. (Pending in Assembly Committee on Governmental Organization)

Prior legislation. SB 336 (Umberg) of 2023. This bill would require a state agency administering a grant program to reimburse a grantee's indirect costs at one of three specified rates requested by the grantee in its state grant program application. (Pending on the Assembly floor)

SB 557 (Limón) of 2023. This bill would have expanded the definition of a grant for the purposes of the California Prompt Payment Act (PPA) requiring timely payments to include nonprofits by changing what is considered a grant and sets a specific monetary threshold of $250 or 5% of the invoiced amount (whichever is lower) for when a state agency can dispute a bill related to property or services delivered. (Vetoed by the Governor)

AB 590 (Hart), Chapter 535, Statutes of 2023. Authorized a state agency administering a grant program to provide for advance payments to a recipient 501(c)(3) nonprofit organization, as specified. The advanced payment shall not exceed 25% of the total grant or contract amount, unless the state agency determines that the project requires a larger advance and the recipient entity provides sufficient justification and documentation for that larger amount.

AB 619 (V. Fong) of 2023. This bill would have authorized nonprofits providing services to a state agency to request to modify their service delivery methods during a declared state of war emergency or state of emergency and additionally authorizes nonprofits to request contract flexibility whenever a disruption occurs that prohibits a nonprofit entity from providing services to a state agency. (Senate Appropriations Committee - Held under submission)

AB 696 (Lowenthal) of 2023. This bill would have established the California State Grants and Contracts Modernization Act, which beginning July 1, 2025, requires a state agency that administers a grant or enters into contracts with eligible entities to provide for and accept electronic signatures and offer electronic payment options, as specified. (Senate Appropriations Committee - Held under submission)

AB 885 (L. Rivas) of 2023. This bill would have established the “California Nonprofit Fairness in Contracting Act” which would provide nonprofits preferential treatment when contracting with the state for goods or services or when contracting with a local agency using state funds. (Never heard by the Assembly Accountability and Administrative Review Committee)

AB 156 (Committee on Budget), Chapter 569, Statutes of 2022. Authorized, until July 1, 2025, state agencies administering specified programs to advance payments to local agencies, nongovernmental entities, and other state agencies if certain criteria are met including requiring advance payment recipients to provide an itemized budget, spending timeline, and work plan.

AB 2252 (Limon), Chapter 318, Statutes of 2018. The California Grant Information Act of 2018, requires the California State Library to create an internet web portal to provide a centralized location for grant seekers to find state grant opportunities and requires the California State Library to report to the Legislature on the effectiveness of the portal, including, among other things, the utilization rate by state agencies.

REGISTERED SUPPORT / OPPOSITION:

Support

Santa Ynez Band of Chumash Indians

Opposition

None on file

Analysis Prepared by: Eric Johnson / G.O. / (916) 319-2531