N.Y. late payments to not-for-profits could impact critical services

Staff reports
Thomas P. Dinapoli

Late approval of contracts and late payments to not-for-profit service providers by state agencies is jeopardizing critical services for people in communities across New York, according to state Comptroller Thomas P. DiNapoli.

DiNapoli’s report notes state agencies were six months late in 2010, on average, in approving nine out of 10 contracts valued at $50,000 or more, often after the services were rendered.  Meanwhile, not-for-profits continued to provide services even while their contracts were bogged down in the state approval process. Further analysis by the Comptroller’s office of the first six months of 2011 revealed that nearly 90 percent of contracts approved by the Comptroller were submitted late by state agencies. These delays create financial difficulties for organizations, which cannot be paid until contracts are approved.

“Not-for-profits operate on very thin margins,” DiNapoli said. “Yet they provide vital services for vulnerable New Yorkers.

“Delay only costs taxpayers money and hurts New Yorkers who rely on these services.  The state should ensure it gets not-for-profit contracts approved on time and address other longstanding issues that continue to harm the not-for-profit sector, he said”

Non-profits provide basic services – from health care clinics to work force development programs – with 22,000 active grant contracts totaling $16.8 billion, according to the report.  The not-for-profit sector employed 1.25 million people statewide in 2010, 14 percent of New York’s workforce, and contributed nearly $148 billion in annual revenue to the state’s economy

Not-for-profits often incur unreimbursed operational costs under the current arrangement.  This is compounded by current economic instability, which has resulted in heavier caseloads due to increased unemployment, cuts in government funding, and a significant drop in private donations.

However, the Prompt Contracting Law of 1991 requires state agencies to process contracts with not-for-profit entities within 150 to 180 days, the report said.  Last year, 71 percent of not-for-profit contracts were not approved by the start or renewal date, according to the Comptroller’s office.

DiNapoli has submitted  to improve the grant contracting process and require agencies to pay interest on late contracts earlier to ease the financial burden on not-for-profits