Relates to requirements associated with contracts between state agencies and not-for-profit organizations

◆ The sponsor's argument

Why Shelley Mayer says this is needed

New York State has long contracted with not-for-profit organizations to provide critical services in communities throughout the state, including early childhood education, mental health services, homeless housing programs, and substance use treatment. These essential social safety net services are delivered as an extension of the state to millions of New Yorkers each day. Delays in payment and a complex contracting process have long challenged not-for-profit providers. A recent statewide survey found that 33 percent of not-for-profit organizations awarded state funds reported being owed more than $58 million for services already delivered. Reimbursement delays regularly last for months and, in some cases, more than a year. As a result, organizations are often required to-rely on lines of credit and incur interest costs in order to meet payroll and maintain operations. In a recent survey conducted among the New York Council of Nonprofits' members, 65 percent reported concern about fund- ing basic operations in 2025, up from 62 percent the prior year. These challenges are particularly acute when not-for-profit organiza- tions are required to begin or continue providing services prior to full contract execution or during delays in contract renewal, without timely access to funding. While current law permits advance payments in certain circumstances, such payments are not consistently provided and lack uniform standards. This bill addresses these issues by establishing clear and consistent requirements for advance payments, including requiring state agencies to provide an advance equal to twenty-five percent of the contract value within thirty days of contract execution and to provide comparable advances when contracts are delayed and services continue under a writ- ten directive. These provisions are limited to a defined percentage of the contract value and apply only where funds have been appropriated. Advance payments are not required where prohibited by the terms and conditions of applicable federal funding. In addition, the bill establishes defined timelines for the review and approval of contract modifications and clarifies that certain final invoices may be processed as modification requests. The bill also requires the inclusion of de minimis indirect costs in not-for-profit contracts, where permissible under federal funding rules. By clarifying and standardizing these practices, this legislation is intended to improve consistency and predictability in the contracting process and ensure that not-for-profit organizations have access to funding necessary to continue providing services without disruption.

This is the sponsor's own case for the bill, quoted from their memorandum. It is not Agora's description of what the bill does.