State-funded assistance grants and contracts: advance payments.

Assembly Member Hart's legislation revises California's advance payment practices for state grants and contracts with nonprofit organizations and tribal entities. The bill modifies existing requirements for grants advertised before January 1, 2026, while establishing new mandatory advance payment provisions for future funding opportunities.

For grants advertised prior to 2026, the legislation maintains current advance payment caps at 25% of total funding, though agencies may exceed this limit with sufficient justification. State agencies must consider advance payment practices developed by the Strategic Growth Council's Community Assistance for Climate Equity program. The bill also refines requirements for recipient entities, mandating that organizations receiving over $10,000 deposit advance payments in federally insured accounts and submit quarterly progress reports on fund expenditure.

Beginning January 1, 2026, state agencies must provide advance payments for all advertised grants and contracts. Grant solicitations will specify the percentage of funds available as advance payments, and this information must be included when agencies register grants with the California State Library. The Department of Finance retains authority to audit any state agency, recipient, or subrecipient receiving advance payments, with entities required to provide access to financial records and other relevant materials.