Extends the effectiveness of a provision pertaining to grants to school districts and other public educational entities

Summary of provisions of the bill

Section 1 of the bill would amend subdivision 11 of section 94 of Part C of Chapter 57 of the Laws of 2004 to extend the effectiveness of

§71 of Part C until June 30, 2011.

Section 2 would be the effective date.

Statement in support of the the bill

Paragraph (a) of subdivision 2 of §1l2 of the State Finance Law, which requires that state agency contracts in excess of $15,000 be approved by OSC through the state contract process contains no exception for discre- tionary agency grants. In 2004, §71 of Part C of Chapter 57 of the Laws of 2004 was enacted, which supplied authority for an exemption from state contracting requirements for school districts and various other public educational entities, the process for which was to be developed jointly between the Commissioner of Education and the Office of the State Comptroller. The result has been a streamlined competitive RFP award approval process that mimics the state contracting process except that it allows for payment without a contract. Similar to requirements stipulated in contracts approved by OSC under §1l2 of the State Finance Law, the streamlined process requires educational entities to submit budgets, program goals and expenditure reports to the State Education Department (SED). However, under the provisions of subdivision 11 of §94 of Part C of Chapter 57 of the Laws of 2004, §71 sunsets annually on June 30, which has been extended each year in the Education, Labor and Family Assistance (ELFA) budget Article VII legislation. However, the

Governor's veto of the 2010-11 ELFA Article VII bill (S.6607-B/A.9907C) for reasons having nothing to do with continuing this exemption, resulted in the expiration of the provisions of §71 of Part C of Chapter 57 of the Laws of 2004 on June 30, 2010.

The practical effect of the expiration of this exemption on SED, which administers thousands of grant payments to school districts and other public educational entities each year, and on these districts and enti- ties, would be that SED and they would incur additional expense and staff time to complete the paperwork needed to put these grants through the state contract process. And, the time for processing these grants would be greatly lengthened, so that school districts and other entities that receive them would have to wait many months longer than previously to receive their funds. Delays in the timely awards of discretionary grants supported by federal funds are particularly problematic, as they potentially could result in the loss or lapse of these funds since' the timeframes in which these funds must be disbursed are dictated by the federal grant awards and federal law. The consequence for school districts, public schools, BOCES, public colleges and universities, public libraries, municipalities and other public educational entities would be additional costs, delays in the receipt of grant funds and the risk of loss of these funds should an appropriation lapse or grant expire prior to completion of the state contracting process.

Should this bill not be enacted into law, SED would be required to proc- ess a minimum of 367 more contracts in 2010-2011 for established grant programs, plus an estimated 250 discretionary grants from the federal Race to the Top (RTTT) program for which RFPs have yet to be issued, in addition to the 1,520 state contracts it processed in 2009-10 (a single contract involves multiple payments). This represents an estimated increase of 41 percent over last year in the number of state contracts to be processed. SED is experiencing staff reductions, similar to other agencies, while at the same time needing to make a significant number of additional required procurements and awards :t:elated to RTTT. Grant programs affected by the termination of the contracting exemption, in additional to complex RTTT grants, exemplified by the Graduate-level Teacher Prep Pilot program, include: McKinney-Vento Homeless funding; 21st Century Community Learning Center grants; the Literacy Zone Initi- ative; Teachers of Tomorrow grants; Extended Day/School Violence grants; library construction funding; local government records management incen- tive grants; and family literacy library grants. During the current fiscal crisis school districts and other educational entities are likely to have reduced their administrative staffs as well and may lack the resources necessary to administer the additional requirements related to the state contracting process. The 2010-11 budgets of educational enti- ties that are expecting these grant funds to be paid timely will be adversely affected if the statutory exemption is not extended.

This bill would rectify this situation by extending the effectiveness of §71 of Part C of Chapter 57 of the Laws of 2004 for one additional year, as proposed by the Legislative in A.9707-C/S.6607-B and endorsed by the Governor in his 2010-11 Executive Budget proposal. Discretionary grants

to school districts and other educational entities do not involve the same considerations as procurement of goods and services at the best price or value. Unlike procurement contracts, the goal of discretionary grants is implementation of the policy embedded in the statute or appro- priation language, not to secure the best price or value for the State. The authority to exempt discretionary education grants from the state contracting requirements should be continued for the benefit of school districts and other public educational entities and to create efficiency and cost effectiveness for the State.

Budgetary implications of the bill

This bill would not create any additional cost to the State, school districts or other educational entities. It would result in cost savings to the State, school districts, public schools, BOCES, public colleges and universities, public libraries and other public educational entities by eliminating unnecessary administrative expense and preventing signif- icant delays in the payment of grants.

Prior legislative history

None. This is a new proposal as a separate bill, though identical language was proposed in §43 of Part A of S.6607-B/A.9707-C and Part A of S.2/A.2 for the December Extraordinary Session.

Effective date

Immediately, and the bill would be deemed to have been in full force and effect on and after June 30, 2010, when the exemption expired.