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Budget would lower MPA fee cap, expand fee to all state contracts and move risk management to controller
Summary
The governor's budget would cut the cap on procurement assessments from 1% to 0.33% and expand the fee across all state contracts while shifting enterprise risk management to the state controller's office, officials told the House Committee on Finance.
Committee members heard administration testimony describing a proposed restructuring of procurement fees and a reorganization of risk management.
Sharon described the procurement proposal: a 2017-authorized assessment on master purchase agreement (MPA) vendors capped at 1% has helped fund e-procurement and related functions. "Article 3 section 14 proposes to lower the cap on that fee to 1 third of a percent. But it expands it to all contracts not just MPAs," she said, and added the proposal would expand allowable uses of the restricted receipts to regular operations, including salaries and benefits. The administration said the lower rate applied to a broader contract base would still raise funds over time, but receipts would dip initially because the fee applies to new or renewed contracts.
State Budget Officer Joe Cadiga explained the rationale: expanding the fee base to all purchases allows the state to charge a lower percentage while covering more of the division of purchases' costs currently supported by general revenue. "What we're proposing is expanding that to not only include MPAs, but to include all purchases," Cadiga said, adding that the new fee would ramp up as contracts are renewed.
Representative Rob Finkleman asked for a brief explanation of the difference between a master purchase agreement and a regular contract. Administration staff said MPAs are prequalified lists of vendors and prices that agencies can use without running a new procurement for each purchase. The committee also heard the administration's recommendation to move enterprise-wide risk-management functions to the state controller's office, a change administration witnesses argued better reflects the financial and enterprise nature of the work.
Members asked about the timeline for implementation and how much of the division's roughly $6 million budget would be covered by the new fee structure; administration officials said the goal is to reduce general revenue support over time but that it is unclear whether fees would cover the full budget.
No vote was taken; members requested follow-up costing and implementation timelines.
