An act to amend Section
927
927.2
of the Government Code, relating to state government.

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


SECTION 1.
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 payment requests prepared and submitted by a state agency to the Controller for payment to the named claimant.
(b) “Grant” means 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. Any such grant is a contract and subject to this chapter.
(c) “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) “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) “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) “Notice of refund or other payment due” means a state agency provides notice to the person that a refund or payment is owed to that person or the state agency receives notice from the person that a refund or undisputed payment is due.
(h) “Payment” means any form of the act of paying, including, but not limited to, the issuance of a warrant or a registered warrant by the Controller, or the issuance of a revolving fund check by a state agency, to a claimant in the amount of an undisputed invoice.
(i) “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) There is a discrepancy between the refund or other payment due as calculated by the person to whom the money is owed and by the state agency.
(j) “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.
(k) “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.
(l) “Revolving fund” means a fund established pursuant to Article 5 (commencing with Section 16400) of Division 4 of Title 2.
(m) “Small business” means a business certified as a “small business” in accordance with subdivision (d) of Section 14837, including certified small businesses engaged in the development, design, and construction of California’s high-speed rail system pursuant to the California High-Speed Rail Act (Division 19.5 (commencing with Section 185000) of the Public Utilities Code).
(n) “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
four
million dollars
($3,000,000)
($4,000,000)
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.
SECTION 1.
Section 927 of the
Government Code
is amended to read:
927.
(a)This chapter shall be known and may be cited as the California Prompt Payment Act.
(b)It is the intent of the Legislature that state agencies pay properly submitted, undisputed invoices, refunds, or other undisputed payments due to individuals within 45 days of receipt or notification thereof, or automatically calculate and pay the appropriate late payment penalties as specified in this chapter.
(c)Notwithstanding any other law, this chapter shall apply to all state agencies, including, but not limited to, the Public Employees’ Retirement System, the State Teachers’ Retirement System, the Treasurer, and the Department of General Services.

Summary: 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 payment
penalty, and dictates that the act applies to all state agencies, including, but not limited to, the Public Employees’ Retirement System.
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.
This bill would make a nonsubstantive change to this provision.
This bill would increase that gross receipts maximum to $4,000,000.