Plain English Breakdown
The source text states the bill passed both chambers but does not provide an effective date, so uncertainty remains regarding when these rules begin.
AB-880: Changes to State Grant Payments and Indirect Costs
This law changes how state agencies pay grants, removes a penalty exception for small nonprofits under Medi-Cal, sets new rules for disputing invoices, and requires reimbursement of indirect costs.
What This Bill Does
- Expands the definition of 'grant' to include signed final agreements between state agencies and nonprofit organizations.
- Removes an exemption that previously protected certain Medi-Cal contracts awarded to nonprofits under $500,000 from late payment penalties.
- Sets a minimum threshold for disputing invoices, requiring discrepancies greater than $250 or 5% of the amount (whichever is less) before they count as reasonable cause.
- Requires state agencies to reimburse grantees for indirect costs at one of specified rates requested in their applications, unless prohibited by other laws.
- Allows the creation of indirect cost pools and applies these rules to grants funded by state funds, federal funds, or a combination.
Who It Names or Affects
- State government agencies that award grants or contracts.
- Nonprofit organizations receiving grant funding from the state.
- Local governments and resource conservation districts involved in victim services or restoration programs.
Terms To Know
- Indirect costs
- Expenses for shared resources that support a project but are not tied to one specific task, as defined by federal guidelines and state law.
- Reasonable cause
- A valid reason for the state to dispute an invoice, now requiring a financial difference greater than $250 or 5% of the total amount (whichever is less).
- Nonprofit organization
- An entity that qualifies as tax-exempt under Section 501(c)(3) of the Internal Revenue Code.
Limits and Unknowns
- Reimbursement for indirect costs must still follow any restrictions found in other state or federal laws.
- The text does not specify which exact rates are available, only that they will be specified and requested by the grantee.
- The effective date of this law is not provided in the source material.