State government grants and contracts: payment of claims and grantees’ indirect costs.
With the proposed amendments, AB 880 is expected to have a significant impact on state laws related to grant funding and payment protocols. It will alter the definition of grants to include signed agreements between state agencies and nonprofit organizations directly, ensuring that these entities are recognized as legitimate participants in grant contracts. Furthermore, the bill introduces provisions for reimbursing indirect costs at a specified rate, promoting the sustainability and effectiveness of nonprofit service providers in California. This aligns with California's commitment to supporting nonprofit organizations that serve various community needs.
Assembly Bill 880, introduced by Assembly Member Bennett, aims to amend existing legislation regarding state government grants and contracts, specifically focusing on the timely payment of claims and reimbursement for indirect costs incurred by nonprofit organizations. The bill seeks to address the shortcomings of the California Prompt Payment Act by expanding its definitions and removing limitations that hinder nonprofit organizations from being adequately compensated for their services funded through grants. Notably, the bill aims to eliminate the previous $500,000 cap for nonprofits seeking reimbursement of administrative expenses, thus promoting fair compensation for the actual costs incurred in service provision.
Despite the potential benefits of AB 880, there are areas of contention regarding the changes it proposes. Some lawmakers and stakeholders may argue that the removal of the $500,000 limit could lead to increased costs for the state, particularly in light of the economic constraints facing California. Additionally, questions may arise regarding the dissemination of indirect cost reimbursements, raising concerns about how such funds will be allocated and monitored to ensure they are used effectively. Opponents might worry that these changes could inadvertently complicate the funding landscape or lead to financial imbalances among different types of grant recipients.