BILL NUMBER: SB 553 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 22, 2009
INTRODUCED BY Senator Wiggins
FEBRUARY 27, 2009
An act to amend Sections 927.2 927.1,
927.2, 927.6, 927.7, and 927.11 of the Government Code,
relating to claims against state agencies.
LEGISLATIVE COUNSEL'S DIGEST
SB 553, as amended, Wiggins. Payment of state claims: grants:
nonprofit public benefit corporations.
The California Prompt Payment Act generally governs the payment of
invoices by state agencies. The act requires a state agency that
acquires property pursuant to a contract with a business, or that
awards a grant, as defined, to make payment to the person or
business that is the recipient of the grant on the
date required by the contract or grant , and
within a specified period from the receipt of an undisputed invoice,
or be subject to a late payment penalty. Existing law defines a grant
for the purposes of these provisions as a signed final agreement
between any state agency and a local government agency or
organization authorized to accept grant funding for victim services
or prevention programs administered by any state agency.
This bill would extend the above provisions regarding late
payment penalties to contracts with, or grants to, a nonprofit public
benefit corporation. The bill would apply the above
requirement regarding the timely payment of grants to any signed
final agreement between any state agency and a local government
agency or organization authorized to accept grant funding
administered by any state agency.
Existing law provides that a nonprofit organization shall only be
eligible to receive a penalty payment if it has been awarded a
contract or grant in an amount less than $500,000.
This bill would delete that limitation on the eligibility of a
nonprofit organization to receive a penalty payment.
The act provides that, in the event a state agency fails to make
timely payment because no Budget Act has been enacted, penalties
shall continue to accrue until the time that the invoice is paid.
Existing law provides that a nonprofit public benefit corporation is
not eligible for a late payment penalty in those circumstances.
This bill would delete the above eligibility provision regarding
nonprofit public benefit corporations, thereby making those
corporations eligible for late payment penalties under the act.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 927.1 of the
Government Code is amended to read:
927.1. (a) (1) A state agency that acquires property or services
pursuant to a contract , as defined in subdivision (b) of
Section 927.2, with a business or nonprofit public benefit
corporation , including any approved change order or contract
amendment, shall make payment to the person or
, business , or corporation on the date
required by the contract and as required by Section 927.4 or be
subject to a late payment penalty.
(2) A state agency that awards a grant, as defined in subdivision
(b) (c) of Section 927.2, shall make
payment to the person or , business
, or nonprofit public benefit corporation that is the
recipient of the grant on the date required by the grant and as
required by Section 927.4 or be subject to a late payment penalty.
(b) Except in the event of an emergency as provided in Section
927.11, effective January 1, 1999, the late payment penalties
specified in this chapter may not be waived, altered, or limited by
either of the following:
(1) A state agency acquiring property or services pursuant to a
contract or that awards a grant.
(2) Any person or business contracting with a state agency to
provide property or services or that is the recipient of a grant.
SECTION 1. SEC. 2. Section 927.2 of
the Government Code is amended to read:
927.2. The following definitions apply to this chapter:
(a) "Claim schedule" means a schedule of invoices prepared and
submitted by a state agency to the Controller for payment to the
named claimant.
(b) "Contract" means a legally binding agreement between the state
and another public or private entity for the provision of goods or
services.
(b)
(c) "Grant" means a signed final agreement between any
state agency and a local government agency or organization authorized
to accept grant funding administered by any state agency. Any such
grant is a contract and subject to this chapter.
(c)
(d) "Invoice" means a bill or claim that requests
payment on a contract under which a state agency acquires property or
services or pursuant to a signed final grant agreement.
(d)
(e) "Medi-Cal program" means the program established
pursuant to Chapter 7 (commencing with Section 14000) of Part 3 of
Division 9 of the Welfare and Institutions Code.
(e)
(f) "Nonprofit public benefit corporation" means a
corporation, as defined by subdivision (b) of Section 5046 of the
Corporations Code, that has registered with the Department of General
Services as a small business.
(f) "Nonprofit service organization" means a nonprofit entity that
is organized to provide services to the public.
(g) "Reasonable cause" means a determination by a state agency
that any of the following conditions are present:
(1) There is a discrepancy between the invoice or claimed amount
and the provisions of the contract or grant.
(2) There is a discrepancy between the invoice or claimed amount
and either the claimant's actual delivery of property or services to
the state or the state's acceptance of those deliveries.
(3) Additional evidence supporting the validity of the invoice or
claimed amount is required to be provided to the state agency by the
claimant.
(4) The invoice has been improperly executed or needs to be
corrected by the claimant.
(5) The state agency making the determination or the claimant
involved has been subject to a computing or accounting failure
related to the Year 2000 Problem.
(h) "Received by a state agency" means the date an invoice is
delivered to the state location or party specified in the contract or
grant or, if a state location or party is not specified in the
contract or grant, wherever otherwise specified by the state agency.
(i) "Required payment approval date" means the date on which
payment is due as specified in a contract or grant or, if a specific
date is not established by the contract or grant, 30 calendar days
following the date upon which an undisputed invoice is received by a
state agency.
(j) "Revolving fund" means a fund established pursuant to Article
5 (commencing with Section 16400) of Division 4 of Title 2.
(k) "Small business" means a business certified as a "small
business" in accordance with subdivision (d) of Section 14837.
(l) "Small business" and "nonprofit organization" mean, in
reference to providers under the Medi-Cal program, a business or
organization that meets all of the following criteria:
(1) The principal office is located in California.
(2) The officers, if any, are domiciled in California.
(3) If a small business, it is independently owned and operated.
(4) The business or organization is not dominant in its field of
operation.
(5) Together with any affiliates, the business or organization has
gross receipts from business operations that do not exceed three
million dollars ($3,000,000) per year, except that the Director of
Health Services may increase this amount if the director deems that
this action would be in furtherance of the intent of this chapter.
(m) "Year 2000 Problem" has the same meaning as that set forth in
subdivision (a) of Section 3269 of the Civil Code.
SEC. 3. Section 927.6 of the Government
Code is amended to read:
927.6. (a) State agencies shall pay applicable penalties, without
requiring that the claimant submit an additional invoice for these
amounts, whenever the state agency fails to submit a correct claim
schedule to the Controller by the required payment approval date. The
penalty shall cease to accrue on the date the state agency submits
the claim schedule to the Controller for payment, and shall be paid
for out of the state agency's funds. If the claimant is a certified
small business, a nonprofit organization, a nonprofit public benefit
corporation, or a small business or nonprofit organization that
provides services or equipment under the Medi-Cal program, the state
agency shall pay to the claimant a penalty of one-quarter of 1
percent of the amount due, per calendar day, from the required
payment date. However, a nonprofit organization shall only
be eligible to receive a penalty payment if it has been awarded a
contract or grant in an amount less than five hundred thousand
dollars ($500,000).
(b) For all other businesses, the state agency shall pay a penalty
at a rate of 1 percent above the rate accrued on June 30 of the
prior year by the Pooled Money Investment Account, not to exceed a
rate of 15 percent, except that, if the amount of the penalty is
seventy-five dollars ($75) or less, the penalty shall be waived and
not paid by the state agency. On an exception basis, state agencies
may avoid payment of penalties, for failure to submit a correct claim
schedule to the Controller by the required payment approval date, by
paying the claimant directly, from the state agency's revolving fund
within 45 calendar days following the date upon which an undisputed
invoice is received by the state agency.
SEC. 4. Section 927.7 of the Government
Code is amended to read:
927.7. The Controller shall pay claimants within 15 calendar days
of receipt of a correct claim schedule from the state agency. If the
Controller fails to make payment within 15 calendar days of receipt
of the claim schedule from a state agency, the Controller shall pay
applicable penalties to the claimant without requiring that the
claimant submit an invoice for these amounts. Penalties shall cease
to accrue on the date full payment is made, and shall be paid for out
of the Controller's funds. If the claimant is a certified small
business, a nonprofit organization, a nonprofit public benefit
corporation, or a small business or nonprofit organization that
provides services or equipment under the Medi-Cal program, the
Controller shall pay to the claimant a penalty of one-quarter of 1
percent of the amount due, per calendar day, from the 16th calendar
day following receipt of the claim schedule from the state agency.
However, a nonprofit organization shall only be eligible to
receive a penalty payment if it has been awarded a contract or grant
in an amount less than five hundred thousand dollars ($500,000).
For all other businesses, the Controller shall pay
penalties at a rate of 1 percent above the rate accrued on June 30 of
the prior year by the Pooled Money Investment Account, not to exceed
a rate of 15 percent, except that, if the amount of the penalty is
seventy-five dollars ($75) or less, the penalty shall be waived and
not paid by the Controller.
SEC. 2. SEC. 5. Section 927.11 of
the Government Code is amended to read:
927.11. (a) Except in the case of a contract with a certified
small business, a nonprofit organization, or a nonprofit public
benefit corporation, if an invoice from a business under a contract
with the Department of Forestry and Fire Protection would become
subject to late payment penalties during the annually declared fire
season, as declared by the Director of Forestry and Fire Protection,
then the required payment approval date shall be extended by 30
calendar days.
(b) If the Director of Finance determines that a state agency or
the Controller is unable to promptly pay an invoice as provided for
by this chapter due to a major calamity, disaster, or criminal act,
then otherwise applicable late payment penalty provisions contained
in Section 927.7 shall be suspended except as they apply to a
claimant that is either a certified small business, a nonprofit
organization, a nonprofit public benefit corporation, or a small
business or nonprofit organization that provides services or
equipment under the Medi-Cal program. The suspension shall remain in
effect until the Director of Finance determines that the suspended
late payment penalty provisions of this section should be reinstated.
(c) In the event a state agency fails to make timely payment
because no Budget Act has been enacted, penalties shall continue to
accrue until the time that the invoice is paid.