1. (a) Qualifying 501(c)(3) nonprofit organization recipients, and any recipient identified at the program level, are eligible for advance payments up to 25 percent of the total grant award, subject to the below conditions:

   1. (1) The recipient will provide an itemized budget for the eligible costs the advance payment will fund, a spending timeline, and a workplan in a form or manner specified by the Department.
   2. (2) The recipient will submit documentation to support the need for advance payment, which may include, but is not limited to, invoices, contracts, estimates, payroll records, and financial records.
   3. (3) The recipient will demonstrate its current status in good standing as an organization exempt from taxation under Section 501(c)(3) of the Internal Revenue Code.
   4. (4) The recipient shall obtain insurance commensurate with the assessed risk.
   5. (5) The recipient will deposit advance payment funds into a federally insured account that provides the ability to track interest earned and withdrawals.
   6. (6) Any accumulated interest shall be deemed to be grant money, subject to federal and state laws and regulations, and the recipient shall report interest earned on the advance payment to the Department.
   7. (7) The account in which the advance is stored must be in the recipient entity's name, and not the name of any of its directors or officers.
   8. (8) The recipient will establish procedures to minimize the amount of time that elapses between the transfer of funds and the expenditure of those funds by the recipient or subrecipient.
   9. (9) Advancing funds to a contractor or subrecipient does not waive the recipient's obligations under this provision.
   10. (10) The recipient will provide progress reports on the expenditure of the advanced funds on a quarterly basis, unless requested to do so more frequently by the Department.
   11. (11) All unused funding provided as an advance payment, but not expended within the grant or contract timeline, shall be returned to the Department within 60 days of the agreement end date.
   12. (12) The recipient will provide a progress report following the expenditure of an advance payment that includes a summary of work completed, proof of expenditure, and other associated information as might be requested by the Department.

2. (b) All other recipients may be eligible to receive an advance payment for project expenditures.

   1. (1) An advance payment shall not exceed the amount necessary for project expenses for a 90-day period.
   2. (2) The recipient provides a justification for the advance deemed sufficient by the Department.
   3. (3) Funds received as an advance payment shall be deposited into a federally-insured, interest-bearing account that provides the ability to track interest earned and withdrawals.
   4. (4) The period of time between receipt of the advance payment funds and disbursement of the advance payment funds shall be minimized to the extent possible. Failure to liquidate advance payments within the three month period may result in denial of future advance payment requests.
   5. (5) Interest earned during a 180-day period shall be remitted to the Department.

3. (c) Advance payment is not allowable under the following circumstances:

   1. (1) An existing advance is not completely liquidated.
   2. (2) The advance will reduce the project balance below ten percent of the award amount.
   3. (3) An unresolved invoice dispute initiated by the Department exists.
   4. (4) Resolution of an audit or agreed-upon-procedure finding of overpayment, unallowable costs, inadequately supported costs, or unsupported costs is pending.
   5. (5) The project is not current in invoicing or reporting.
   6. (6) The project is in the final three months of the project duration.
   7. (7) Additional conditions imposed prohibit an advance payment.
   8. (8) Advance payment is otherwise prohibited by law or grant program requirements.

Note: Authority cited: Sections 407 and 485, Food and Agricultural Code. Reference: Sections 201, 401, 401.5, 404 and 485, Food and Agricultural Code; and Section 18901.9.2, Revenue and Taxation Code.

History

1. New section filed 9-21-2016; operative 1-1-2017. Exempt from Administrative Procedure Act pursuant to Food and Agricultural Code Section 485(d), which provides “Procedures, forms, and guidelines established for these grant programs, including the application process, are exempt from Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code.” (Register 2016, No. 39).

2. Amendment of section and Note filed 12-30-2024; operative 1-1-2025. Exempt from the APA pursuant to Food and Agricultural Code section 485 and submitted to OAL for filing and printing only pursuant to Government Code section 11343.8 (Register 2025, No. 1).