Little Hoover Commission adopts report urging faster, fairer state contracting with nonprofits

The Little Hoover Commission voted to adopt a staff draft report on state contracting with nonprofit organizations, following a staff presentation that documented lengthy reimbursement delays, low indirect‑cost recovery and high administrative burdens.

Crystal Beckham, the report’s lead staff member, told commissioners that many nonprofits subsidize state programs with their own funds because the State frequently uses reimbursement payment models. The report recommends requiring a 25% advance payment for state grants (and up to 100% for nonprofits in good standing three years or more), tying reimbursement for indirect costs at least to the federal de minimis rate, streamlining contract amendment processes for emergencies, and creating a nonprofit liaison office in the Office of the Governor to standardize practices across agencies.

Commissioner Gil Garcetti moved to adopt the report and Commissioner Dion Aroner seconded. Roll-call votes recorded “Aye” from several commissioners, including Chair Pedro Nava, Vice Chair Anthony Canela, Commissioners Aroner, Garcetti, Hernandez and Senator Roger Nilo; staff said the motion passed and the report will be formatted and published.

The commission noted the recommendations aim to reduce administrative burdens that force smaller nonprofit partners to draw on reserves or take on debt to deliver state services. Commissioners said they will follow up on implementation and that the vote will be formally published when the report is released.

Next step: staff will finalize formatting and release the adopted report; commissioners discussed continuing oversight and legislative follow-up as appropriate.