Call to Order and Roll Call
The 5th meeting of the Government Nonprofit Contracting Task Force was held on Monday, October 24, 2016, at 11:00 AM, in Room 131 of the Capitol Annex. Senator Max Wise, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Max Wise, Chair; Senator Stephen West; Representatives Dennis Horlander, and Addia Wuchner; Norman Arflack, Promod Bishnoi, Cyndee Burton, Danielle Clore, Samantha Davis, Andrew English, Robert Jones, Mardi Montgomery, Judy Piazza, and Michelle Sanborn.
Guests: Bart Baldwin, President & CEO, Bart Baldwin Consulting.
LRC Staff: Judy Fritz, Daniel Carter, Van Knowles, and Jay Jacobs
Andrew English moved to approve the September 26, 2016 meeting minutes. Mardi Montgomery seconded the motion. The motion carried with a voice vote.
Task Force Progress In Other States
Representative Patti Bellock, a member of the Illinois General Assembly, gave an overview via teleconference about her experience and perspective of working with the Nonprofit Contracting Task Force in Illinois which resulted in House Bill 2.
House Bill 2 was enacted in 2013 and was the vehicle leading to Illinois becoming a national model for nonprofits contracting with a state. Illinois was recognized by the White House as the first state in the nation with legislation requiring the implementation of a comprehensive set of standards and mandating transparency and accountability throughout the entire grant life cycle. The nonprofit community and government staff were included in this process which had been ongoing for three years. Illinois recognized that billions of grant dollars were coming into the state and House Bill 2 created the Illinois Single Audit Commission. The findings of the Single Audit Commission created the Grant Accountability and Transparency Act.
The two main ideas that came out of the commission were transparency and uniformity. The grant process had no common application, no common grant agreement, and a lack of transparency, no uniform administrative rules, and no lists noting non-compliance. The commission focused on how the federal government administered and managed grant money. The mindset was if the grantees were held to a higher standard when they applied for a federal grant then the state should also be held to a similar standard with regard to state grant money. The second prong in 2013 House Bill 2 was the creation of the centralized grant management union that would be housed within the Governor’s Office of the management of the budget. That unit would provide the grantors and the grantees uniformity. This was major reform and it has saved Illinois billions of dollars.
In response to questions by Ms. Clore, Representative Bellock stated that it is critical to involve nonprofits in the process from the beginning. The nonprofits were initially worried that the changes were going to be duplicative, paperwork oriented, and an overall strain on them to be able to provide services to their clients. The state government agencies also thought it would be more work for them.
In response to a question by Representative Wuchner, Representative Bellock stated that the guidelines for each stage of the grant lifecycle are posted on the GATA website at http://www.illinois.gov/gov/budget/cases/grantsaccountability.aspx.
In response to a question by Mr. English, Representative Bellock stated that the grant criteria are the same for federal and state level grants. Having the same criteria for both builds accountability and transparency. Providing accurate data is key to enforcement and drives decision making.
In response to questions by Ms. Clore, Representative Bellock stated that there was resistance in implementing and mirroring the OMB Guidelines but it has saved Illinois billions of dollars. In Illinois indirect costs are paid the same for federal and state grants.
In response to a question by Ms. Montgomery, Representative Bellock stated that there is a monitoring process that derived from GATA but she is not aware of how many people are employed in the monitoring office.
In response to a question by Ms. Sanborn, Representative Bellock stated that managed care organizations are included but she is not aware of the connection.
In response to a question by Ms. Phillips, Representative Bellock stated that every agency within the state and every group that would be given a grant is included in GATA. It is very comprehensive.
In response to a question by Representative Wuchner, Representative Bellock stated that GATA is housed in the Governor’s Office of the budget.
Nonprofit Contracting and Managed Care Organizations (MCOs)
Veronica Cecil, Deputy Commissioner of the Department for Medicaid Services with the Cabinet for Health and Family Services, gave an overview about cost reimbursement, prompt payment, and payment processes with Managed Care Organizations.
In response to questions by Senator West regarding non-compliance, Ms. Cecil stated that there are some penalties being issued but most are being resolved with letters of inquiry and corrective action plans. The department has not implemented 2016 Senate Bill 20 (AN ACT relating to Medicaid provider appeals and declaring an emergency), which passed during the 2016 Regular Session. Administrative regulations will be filed with LRC by November 15th. MCOs are trying to put practices in place that ensure that they are appropriately denying claims. Prior to Senate Bill 20 there were not many penalties but the Department of Insurance did charge interest if prompt payment was violated.
In response to a question by Ms. Sanborn, Ms. Cecil stated that the complaint form can be general but specific examples should be included.
In response to a question by Mr. Jones, Ms. Cecil stated that the department has tried to standardize some of the processes and forms but it gets complicated with managed care. The department is currently working on an online provider portal which should alleviate some of the delays in enrollment for the providers.
Changes in Contracts Mid-Stream
Cyndee Burton, Administrator with Matthew25 AIDS Services gave an overview of how government contract changes and late payments affect nonprofits. She referenced a grant that was to be used for HIV testing that was significantly reduced.
In response to questions by Representative Wuchner, Ms. Burton stated the reduction of funds was due to a three percent reduction in funding from the Centers for Disease Control and Prevention, as well as well, as a reduction in state funding. The nonprofit continued its deliverables for HIV testing and discontinued Hepatitis C testing after all the test kits were used. After Hepatitis C testing was discontinued, those clients were referred to local health departments for that test, but most local health departments do not administer it. Those clients most likely will go without Hepatitis C tests, and 54 percent of the tests that were administered prior to the cuts were positive.
In response to a question by Senator West, Mrs. Burton stated that the high Hepatitis numbers are related to injection drug use.
Michelle Sanborn, President of the Children’s’ Alliance (Alliance), gave an overview of contractual changes to the Private Child Caring (PCC) Agreement and how those changes affect nonprofits that provide those services.
In response to a question by Ms. Clore, Ms. Sanborn stated that the Alliance is being paid less than full cost currently and that cuts have reduced funds even more.
Bart Baldwin, President and CEO with Bart Baldwin Consulting, gave a broad overview of how mid-stream changes affect a nonprofits overhead and the ability to provide efficient and high quality services.
In response to a question by Representative Horlander, Mr. Baldwin stated that change orders allow for unforeseen expenses that are incurred in contracts.
In response to questions by Ms. Clore, Ms. Burton stated that, because the cut on the small grant was a small amount, it was not worth the risk of losing the larger grants. Ms. Sanborn stated that, over time, not getting reimbursed ads up and can force some nonprofits out of business. Mr. Baldwin stressed that it is very important to fund services in the budget and not to assume that the budget from the executive branch will be enough to keep the quality of services at a high level. Cutting services can cost the commonwealth more money because the services still must be available.
In response to a question by Representative Wuchner, Mr. Baldwin stated that there is a limit on how much money a nonprofit agency can raise privately and the level of private fundraising varies by the services that the nonprofit provides. Ms. Sanborn stated that there is a variety of levels of fundraising across the agencies she works with. Ms. Burton stated that about two percent of her budget is raised from private funds.
In response to a question by Ms. Clore, Mr. Baldwin stated that there has to be a balance on what is determined to be a reasonable cost and not be solely up to the nonprofit to fill the gap in the government’s budget. Ms. Burton stated that many grant requirements limit the percentage that may be spent on administration. Her fear is that agencies will start to limit what can be spent on infrastructure and development.
Ways to Improve Contract Processes and Contract Payments in Kentucky
Ms. Clore would like to see better data collection.
Senator Wise announced that the last meeting will be on Tuesday, November 15 at p.m. The task force will be discussing and voting on recommendations. Recommendations must be limited to the issues that have been discussed during our task force meetings. Some of the suggestions that have been mentioned thus far are:
• Increased training for both nonprofits and state agencies;
• Clearer definitions;
• Explore streamlining of contracting and auditing processes;
• Explore and address gap between state and federal indirect cost reimbursement rates;
• Mirror all or part of OMB Uniform Guidance regulations in Kentucky; and
• Collaboration between cabinets for consistency and expectations.
Task force members wanting to add recommendations by email may do so by November 1. No written recommendations will be accepted after November 1. Recommendations by email must be sent to Senator Wise, Representative Meyer, and Government Nonprofit Task Force staff.
A copy of the PowerPoint presentation and other meeting materials are part of the task force’s official record in the Legislative Research Commission Library. There being no further business, the meeting was adjourned at 12:51 p.m.