AB 590: State-funded assistance grants and contracts: advance payments.

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Existing law also establishes a pilot program, which is repealed on July 1, 2025, to explore possible improvements to the states existing advance payment practices for state-funded assistance grants. Existing law authorizes an administering state agency of a grant program to advance a payment to a recipient entity, which means a local agency or a nongovernmental entity that is awarded a grant by an administering state agency and with whom the administering state agency has entered into a contract pursuant to that grant, in accordance with specified procedures. These procedures include stipulating an advance payment structure and request process within the grant agreement or contract and ensuring that the advance payment to the recipient entity does not exceed 25% of the total grant amount awarded to the recipient entity, except in specified circumstances. Existing law establishing the pilot program further authorizes an administering state agency to advance payment to a recipient state agency awarded a grant in accordance with specified procedures, including stipulating an advance payment structure and request process within the grant agreement or contract between the state agency administering the program and the recipient state agency and requiring the recipient state agency to provide an itemized budget, spending timeline, and workplan.

This bill would declare the intent of the Legislature to improve and expand the states existing advance payment practices for state grants and contracts with nonprofits. The bill would authorize 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. The bill would require 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. The bill would require the recipient entity to satisfy certain minimum requirements, including providing an itemized budget and submitting documentation, as required by the administering state agency, to support the need for advance payment.

The bill would require the Department of Finance or its designee to audit a state agency subject to these provisions or any recipient or subrecipient that received an advance payment.