State government grants and contracts: payment of claims and grantees’ indirect costs.

Assembly Member Bennett's proposal to modify California's grant payment and reimbursement systems revises how state agencies compensate nonprofit organizations and process grant payments. The legislation expands the definition of eligible grants to include agreements between state agencies and nonprofit organizations, while establishing standardized approaches for indirect cost reimbursement.

Under the bill's provisions, state agencies must reimburse grantees' indirect costs using one of several specified methods: the organization's federally negotiated indirect cost rate, the federal de minimis rate, an existing state rate, or a newly proposed rate if no prior state rate exists. The legislation also modifies the state's process for disputing invoices, requiring discrepancies to exceed either $250 or 5% of the claimed amount before an agency can challenge the payment.

The measure adjusts penalty structures for late payments, maintaining different rates for various types of organizations. Nonprofit organizations and small businesses would receive penalties at 10% above the U.S. Prime Rate for delayed payments, while other businesses face penalties at 1% above the Pooled Money Investment Account daily rate, capped at 15%. State agencies must report annually on late payment penalties paid to different categories of grantees, though the Department of Forestry and Fire Protection remains exempt from these reporting requirements.