Under new provisions to a law on contracting with nonprofits, state agencies must observe strict time frames by which they renew contracts and pay nonprofits for services performed. State agencies have 90 days to inform nonprofits about contract renewals. In addition, the state comptroller will be required to publish an annual report on the effectiveness of the new law, and a joint advisory committee with 16 representatives from state agencies and nonprofits will evaluate and promote adherence to it.
According to the state comptroller, 62 percent of the nonprofit contracts with state agencies in 2005-06 did not meet timelines for approval. And when contracts were canceled, the nonprofits received late payments for previously rendered services but had to forfeit interest penalties. Under the new provisions, nonprofits are no longer required to waive their rights to interest payments as a condition for signing a state contract.
Nonprofit agencies welcome the law, which goes into effect on January 1, saying it finally sets benchmarks for state agencies.