Nonprofit leaders tell Senate committee late state reimbursements threaten services; SB129 discussed

The Senate Community and Regional Affairs Committee on April 8 heard extensive public testimony in support of Senate Bill 129, a measure sponsored by Senator Scott Kawasaki to require prompt payment from the state to contractors and grantees, including nonprofit organizations.

Senator Scott Kawasaki (District P) introduced SB129 as a parity measure: "this has nothing to do with this administration or any administration. This has to do with prompt payments from business to business, from government to to basically our contractors," he said, describing the bill’s aim to require timely payment to nonprofits that administer state-funded programs.

Testifiers representing statewide nonprofits, local providers and funders described multi-month delays in reimbursements that they said threaten operations and services. Pat Branson, retired CEO and board member from Kodiak, said outstanding bills can be large: "outstanding bills for nonprofits are sometimes over $100,000 for operations and over $200,000 for capital projects." Tom Hirakatsuka, chief financial officer for HOPE Community Resources, said his organization was more than $100,000 out of pocket before payment arrived: "Hope was out more than $100,000 by the time we received payment." Several speakers reported individual payment delays ranging from 60 to 150 days; others said the delays forced them to cover payroll and vendor costs from other accounts.

Advocates urged the committee to pass the bill to create predictable cash flow for providers of child care, disability services, suicide-prevention programs and other social services. Dr. Jen Griffith, vice president of policy and advocacy at Alaska Children’s Trust, said SB129 supports organizations that deliver state policy on the ground and helps prevent service disruptions.

Committee discussion focused on fiscal notes and agency capacity to implement prompt-payment rules. Senator Kawasaki referenced a fiscal note from the Office of Management and Budget (component cited in the record) estimating potential costs tied to staffing and systems changes; he said one fiscal note included an estimated $30,000 and a one-time cost of about $150,000 for an additional staff position to ensure timely payments in one agency.

Chair Merrick announced an amendment deadline for SB129 of Thursday, April 17 at noon; the committee is not meeting next week because of budget subcommittee work. No final committee vote on SB129 was recorded during the session; public testimony was closed.