California AB 1039

Existing law authorizes a state agency administering a grant program or contract to advance a payment to a recipient entity, subject to specified requirements. Existing law defines "recipient entity" for these purposes to mean a private, nonprofit organization qualified under federal law, or a federally recognized Indian tribe whose territorial boundaries lie wholly or partially within the State of California, as specified. Existing law requires the administering state agency, among other things, to prioritize recipient entities and projects serving disadvantaged, low-income, and underresourced communities, to stipulate an advance payment structure and request process within the grant agreement or contract, and to ensure an advance payment to the recipient entity does not exceed 25% of the total grant or contract amount, except as specified. Existing law requires recipient entities to satisfy specified minimum requirements, including submitting prescribed documentation, providing progress reports on the expenditure of advanced funds no less than on a quarterly basis, and depositing any funds received as an advance payment into a federally insured account, as specified. This bill would expand the definition of "recipient entity" to include a private, nonprofit organization qualified under state law and would limit the requirement to prioritize recipient entities and projects to grants and contracts advertised before January 1, 2026. The bill would eliminate the requirement to stipulate an advance payment structure and request process. The bill would limit the above-described documentation and federally insured account requirements to apply only to grants and contracts in excess of $10,000 and, for grants or contracts less than $10,000, would instead require recipient entities to provide the above-described progress reports no less than annually. The bill would revise and recast the above-described authorization for an administering state agency to instead require the agency to advance a payment to an eligible recipient entity in accordance with the above requirements for any grants and contracts advertised on or after January 1, 2027, with a total award value of $150,000 or less, receiving an initial disbursement of 25 percent of the total award that meets one or more of specified criteria. The bill would authorize an administering state agency to distribute advance payments in multiple installments over the course of the grant or contract term and would authorize a recipient entity to request subsequent advance payment installments, as provided. This bill would authorize an administering state agency to opt out of the default advance payment requirement for a specific funding opportunity if the agency determines it would create an irreconcilable conflict with federal law, bond requirements, or a documented high-risk profile of the specific program. To exercise the opt-out, the bill would require the agency to follow prescribed procedures, including clearly stating in the grant solicitation or request for proposal that advance payment is not available for that specific opportunity. Existing law requires each state agency to register every grant the state agency administers with the California State Library prior to commencing a solicitation or award process for distribution of the grant, and to provide specified information that assists the California State Library with cataloging the distribution of grants and provides potential applicants with understandable and consistent information about available funding opportunities. This bill would require a state agency to include within the information submitted to the California State Library, the percentage of the grant funds that may be distributed as an advance payment. This bill would require, on or before July 1, 2027, the Strategic Growth Council, in consultation with the Department of Finance and the Department of General Services, to develop a Statewide Advance Funds and Reconciliation Guide (Master Guide) , as specified. The bill would require the Department of General Services to actively promote the Master Guide across state agencies and would require every state agency to adopt the Master Guide as its standard operating procedure for the disbursement, tracking, and reconciliation of advance payments, as provided.