HB 25-1101
Fiscal Note
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
HB 25-1101: STATE DISBURSEMENT PROCESS
Prime Sponsors:
Rep. Garcia; Bacon
Sen. Weissman
Published for: House Finance
Drafting number: LLS 25-0092
Fiscal Analyst:
Matt Bishop, 303-866-4796
matt.bishop@coleg.gov
Version: Initial Fiscal Note
Date: February 6, 2025
Fiscal note status: The fiscal note reflects the introduced bill. This analysis is preliminary and will be
updated following further review and any additional information received.
Summary Information
Overview. The bill updates procurement procedures for state agencies, including requiring retainer
payments to nonprofit agencies.
Types of impacts. The bill is projected to affect the following areas on an ongoing basis:
State Revenue
State Expenditures
TABOR Refunds
Appropriations. For FY 2025-26, the bill requires an appropriation of $681,251 to the Department of
Personnel and Administration.
Table 1
State Fiscal Impacts
Type of Impact
1
Budget Year
FY 2025-26
Out Year
FY 2026-27
State Revenue Indeterminate Indeterminate
State Expenditures $696,542 $112,339
Transferred Funds $0 $0
Change in TABOR Refunds Indeterminate Indeterminate
Change in State FTE 0.8 FTE 1.0 FTE
1
Fund sources for these impacts are shown in the table below. Page 2
February 6, 2025 HB 25-1101
Table 1A
State Expenditures
Fund Source
Budget Year
FY 2025-26
Out Year
FY 2026-27
General Fund $681,251 $93,226
Cash Funds $0 $0
Federal Funds $0 $0
Centrally Appropriated $15,291 $19,113
Total Expenditures $696,542 $112,339
Total FTE 0.8 FTE 1.0 FTE
Summary of Legislation
The bill updates procurement procedures for state agencies and updates definitions (see
Technical Note). Current law requires state agencies to make payments within 45 days upon
receipt from any nongovernmental entity of a correct notice of the amount due. The bill requires
payments within 45 days upon receipt of a correct notice from a nonprofit organization or a
good faith effort from a nonprofit organization to provide a correct notice.
State agencies must award a retainer to a nonprofit organization as part of a grant award or
other contract, beginning December 31, 2025. The nonprofit organization must spend the
retainer within one year and is not required to complete any of the contracted work in advance.
Beginning January 1, 2026, each nonprofit organization that receives payments from the state
must submit information about the ethnicity of its leadership, its business structure, and if it has
previously received payments from the state. Additionally, the State Controller in the
Department of Personnel and Administration (DPA) must make the submitted information
available upon request.
Assumptions
Some state agencies act as pass-through grantors of federal funds. In cases where state
agencies award federal grants to nonprofit organizations and federal rules prohibit advanced
payments, the fiscal note assumes that state agencies will comply with federal requirements and
this bill does not apply based on the Supremacy Clause.
Page 3
February 6, 2025 HB 25-1101
State Revenue
The bill will decrease state revenue by an indeterminate amount. Requiring retainers to be paid
in advance shifts some payments forward in time, which reduces interest revenue earned to the
funds from which the revenue is paid. The amount of the revenue decrease depends on the how
much sooner payments are made and interest rates, which will vary based on the fund. For
informational purposes, for each $500 million in grants and contracts awarded to nonprofit
organizations, if payments occurred six months earlier on average and the interest rate were
3 percent, the total revenue decrease would be about $7.5 million. Most interest revenue is
subject to TABOR.
State Expenditures
The bill increases state expenditures in the Department of Personnel and Administration by
about $700,000 in FY 2025-26 and $110,000 in FY 2026-27 and subsequent years. These costs,
paid from the General Fund, are summarized in Table 2 and discussed below. The bill also affects
workload in other state agencies.
Table 2
State Expenditures
Department of Personnel and Administration
Cost Component
Budget Year
FY 2025-26
Out Year
FY 2026-27
Personal Services $57,557 $71,946
Operating Expenses $1,024 $1,280
Capital Outlay Costs $6,670 $0
CORE Updates $416,000 $0
Database $200,000 $20,000
Centrally Appropriated Costs $15,291 $19,113
Total Costs $696,542 $112,339
Total FTE 0.8 FTE 1.0 FTE
Staff
The Office of the State Controller in DPA requires a database to maintain disbursement data and
to house additional data collected from nonprofit organizations. Soliciting and maintaining the
database, supporting state agencies that collect the data, and responding to inquiries from
stakeholders requires 1.0 FTE beginning in FY 2025-26. Standard operating and capital outlay
costs are included, and costs are prorated for the bill’s effective date. Page 4
February 6, 2025 HB 25-1101
CORE Updates
The Colorado Operations Resource Engine (CORE) is the state’s accounting system. Given the
large number of contracts subject the retainer requirements, DPA will update the CORE system
to automate the accounting processes related to advanced payments. This is estimated to
require 2,080 contractor hours through the CORE vendor at a rate of $200 per hour, resulting in
$416,000 in expenses for FY 2025-26 only.
Database
The database described above is estimated to cost $200,000 to build in FY 2025-26, with
$20,000 in ongoing system maintenance costs.
Other Agency Impacts
The bill increases workload in every state agency that awards grants or contracts to nonprofit
organizations beginning in FY 2025-26. For payment requests that are not correct, workload
may increase to evaluate if requests reflect a good faith effort. Making advanced payments may
also increase workload to track retainers and harmonize program expenditures. Workload will
minimally increase to collect additional required information on nonprofit organizations and
submit them to new DPA database.
If the retainer payments result in any noncompliance from nonprofit organizations who do not
fulfill the work after receiving the retainer, agencies may experience additional workload to seek
repayment. The fiscal note assumes that contract monitoring and compliance activities
undertaken by state agencies are generally unchanged and no change in appropriations are
required. If particular programs result in substantial workload increases, or if the rate of
noncompliance is great enough to require more audits and compliance checks, affected state
agencies will request additional resources through the annual budget process.
Centrally Appropriated Costs
Pursuant to a Joint Budget Committee policy, certain costs associated with this bill are
addressed through the annual budget process and centrally appropriated in the Long Bill or
supplemental appropriations bills, rather than in this bill. These costs, which may include
employee insurance, supplemental employee retirement payments, leased space, and indirect
cost assessments, are shown in the expenditure table above.
TABOR Refunds
The bill is expected to decrease the amount of state revenue required to be refunded to
taxpayers by an indeterminate amount as discussed in the State Revenue section above. Because
TABOR refunds are paid from the General Fund, decreased cash fund revenue will increase the
amount of General Fund available to spend or save. Decreased General Fund revenue will lower
the TABOR refund obligation, but result in no net change to the amount of General Fund
otherwise available to spend or save. Page 5
February 6, 2025 HB 25-1101
Effective Date
The bill takes effect 90 days following adjournment of the General Assembly sine die, assuming
no referendum petition is filed.
State Appropriations
For FY 2025-26, the bill requires a General Fund appropriation of $681,251 to the Department of
Personnel and Administration, and 0.8 FTE.
Departmental Difference
A number of state agencies anticipated substantial workload increases and technology needs to
implement the bill, totaling about $3.8 million and 26.8 FTE in FY 2025-26. Given the complexity
of the procurement process, different implementation approaches proposed across state
agencies, and the limited information available at the time of publication, the fiscal note has
excluded these costs, and only represents the impacts to the Department of Personnel and
Administration. The fiscal note assumes that DPA will provide guidance to these agencies on
how to implement the bill using existing resources. The fiscal note will be updated as more
information becomes available.
Technical Note
Section 1 of the bill specifies procurement rules for agencies before and after July 1, 2025; the
rules after July 1, 2025 change the supplying agency from “nongovernmental entity” to
“nonprofit organization.” There are nongovernmental entities that may not be nonprofit
organizations. The fiscal note assumes that these nongovernmental entities may still supply to
state agencies under current practice.
State and Local Government Contacts
All State Agencies
The revenue and expenditure impacts in this fiscal note represent changes from current law under the bill for each
fiscal year. For additional information about fiscal notes, please visit the General Assembly website.