Amended in Assembly March 26, 2015

California Legislature—2015–16 Regular Session

Assembly BillNo. 1294

Introduced by Assembly Member Holden

February 27, 2015

An act to amend Sectionbegin delete 927end deletebegin insert 927.2end insert of the Government Code, relating to state government.


AB 1294, as amended, Holden. Statebegin delete government.end deletebegin insert government: prompt payment of claims.end insert

The California Prompt Payment Act dictates that a state agency that fails to make a timely payment for goods or services acquired pursuant to a contract with a specified business or organization is subject to a late paymentbegin delete penalty, and dictates that the act applies to all state agencies, including, but not limited to, the Public Employees’ Retirement System.end deletebegin insert penalty. The act does not apply to claims for reimbursement for health care services provided under the Medi-Cal program, unless the Medi-Cal health care services provider is a small business or nonprofit organization. The act defines the terms “small business” and “nonprofit organization,” in reference to providers under the Medi-Cal program, to mean a business or organization that meets specified criteria, including that, except as specified, together with any affiliates, the business or organization has gross receipts from business operations that do not exceed $3,000,000 per year.end insert

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This bill would make a nonsubstantive change to this provision.

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This bill would increase that gross receipts maximum to $4,000,000.

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Vote: majority. Appropriation: no. Fiscal committee: begin deleteno end deletebegin insertyesend insert. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1begin insert

begin insertSECTION 1.end insert  

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begin insertSection 927.2 of the end insertbegin insertGovernment Codeend insertbegin insert is amended
2to read:end insert



The following definitions apply to this chapter:

4(a) “Claim schedule” means a schedule of payment requests
5prepared and submitted by a state agency to the Controller for
6payment to the named claimant.

7(b) “Grant” means a signed final agreement between any state
8agency and a local government agency or organization authorized
9to accept grant funding for victim services or prevention programs
10administered by any state agency. Any such grant is a contract and
11subject to this chapter.

12(c) “Invoice” means a bill or claim that requests payment on a
13contract under which a state agency acquires property or services
14or pursuant to a signed final grant agreement.

15(d) “Medi-Cal program” means the program established pursuant
16to Chapter 7 (commencing with Section 14000) of Part 3 of
17Division 9 of the Welfare and Institutions Code.

18(e) “Nonprofit public benefit corporation” means a corporation,
19as defined by subdivision (b) of Section 5046 of the Corporations
20Code, that has registered with the Department of General Services
21as a small business.

22(f) “Nonprofit service organization” means a nonprofit entity
23that is organized to provide services to the public.

24(g) “Notice of refund or other payment due” means a state
25agency provides notice to the person that a refund or payment is
26owed to that person or the state agency receives notice from the
27person that a refund or undisputed payment is due.

28(h) “Payment” means any form of the act of paying, including,
29but not limited to, the issuance of a warrant or a registered warrant
30by the Controller, or the issuance of a revolving fund check by a
31state agency, to a claimant in the amount of an undisputed invoice.

32(i) “Reasonable cause” means a determination by a state agency
33that any of the following conditions are present:

34(1) There is a discrepancy between the invoice or claimed
35amount and the provisions of the contract or grant.

36(2) There is a discrepancy between the invoice or claimed
37amount and either the claimant’s actual delivery of property or
38services to the state or the state’s acceptance of those deliveries.

P3    1(3) Additional evidence supporting the validity of the invoice
2or claimed amount is required to be provided to the state agency
3by the claimant.

4(4) The invoice has been improperly executed or needs to be
5corrected by the claimant.

6(5) There is a discrepancy between the refund or other payment
7due as calculated by the person to whom the money is owed and
8by the state agency.

9(j) “Received by a state agency” means the date an invoice is
10delivered to the state location or party specified in the contract or
11grant or, if a state location or party is not specified in the contract
12or grant, wherever otherwise specified by the state agency.

13(k) “Required payment approval date” means the date on which
14payment is due as specified in a contract or grant or, if a specific
15date is not established by the contract or grant, 30 calendar days
16following the date upon which an undisputed invoice is received
17by a state agency.

18(l) “Revolving fund” means a fund established pursuant to
19Article 5 (commencing with Section 16400) of Division 4 of Title

21(m) “Small business” means a business certified as a “small
22business” in accordance with subdivision (d) of Section 14837,
23including certified small businesses engaged in the development,
24design, and construction of California’s high-speed rail system
25pursuant to the California High-Speed Rail Act (Division 19.5
26(commencing with Section 185000) of the Public Utilities Code).

27(n) “Small business” and “nonprofit organization” mean, in
28reference to providers under the Medi-Cal program, a business or
29organization that meets all of the following criteria:

30(1) The principal office is located in California.

31(2) The officers, if any, are domiciled in California.

32(3) If a small business, it is independently owned and operated.

33(4) The business or organization is not dominant in its field of

35(5) Together with any affiliates, the business or organization
36has gross receipts from business operations that do not exceed
37begin delete threeend deletebegin insert fourend insert million dollarsbegin delete ($3,000,000)end deletebegin insert ($4,000,000)end insert per year,
38except that the Director of Health Services may increase this
39amount if the director deems that this action would be in
40furtherance of the intent of this chapter.

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Section 927 of the Government Code is amended
2to read:



(a) This chapter shall be known and may be cited as the
4California Prompt Payment Act.

5(b) It is the intent of the Legislature that state agencies pay
6properly submitted, undisputed invoices, refunds, or other
7undisputed payments due to individuals within 45 days of receipt
8or notification thereof, or automatically calculate and pay the
9appropriate late payment penalties as specified in this chapter.

10(c) Notwithstanding any other law, this chapter shall apply to
11all state agencies, including, but not limited to, the Public
12Employees’ Retirement System, the State Teachers’ Retirement
13System, the Treasurer, and the Department of General Services.

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