Senate Bill S8522

                                BILL NUMBER:S8522

TITLE OF BILL:
An act to amend chapter 57 of the laws of 2004, amending the labor law
and other laws relating to implementation of the state fiscal plan for
the 2004-2005 state fiscal year, in relation to extending certain
provisions of such chapter

PURPOSE OF THE BILL:

To extend, until June 30, 2011, the effectiveness of section 71 of Part
C of Chapter 57 of the Laws of 2004 to continue the authority of the
Commissioner of Education, in conjunction with the Office of the State
Comptroller (OSC), to exempt discretionary grants to school districts,
public schools, boards of cooperative services, public colleges and
universities, public libraries, municipalities and other public educa-
tional entities from the procedures for the award of State contracts
prescribed by paragraph (a) of subdivision 2 of § 112 of the State
Finance Law.  Such exemption allows these discretionary grants to be
paid more timely through a streamlined competitive request for proposals
(RFP) award process.

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.