SB 129-PAYMENT OF CONTRACTS  1:38:24 PM CHAIR MERRICK reconvened the meeting and announced the consideration of SENATE BILL NO. 129 "An Act establishing a 30- day deadline for the payment of contracts under the State Procurement Code; establishing deadlines for the payment of grants, contracts, and reimbursement agreements to nonprofit organizations, municipalities, and Alaska Native organizations; relating to payment of grants to named recipients that are not municipalities; and providing for an effective date." 1:38:44 PM SENATOR SCOTT KAWASAKI, District P, Alaska State Legislature, Juneau, Alaska, gave a brief re-introduction to SB 129, which would ensure that non-profit organizations, municipalities, and Alaska Native organizations receive prompt payment parity with other businesses (e.g. construction companies) that have contractual agreements with the State of Alaska. 1:39:52 PM CHAIR MERRICK opened public testimony on SB 129. 1:40:15 PM PAT BRANSON, representing self, Kodiak, Alaska, testified in support of SB 129. She provided a hypothetical situation to illustrate the need for the State of Alaska to make timely payments to non-profit organizations (non-profits). She emphasized that some non-profits provide vital services to Alaskans and cannot pause those services due to lack of payment. She pointed out that the State of Alaska is required to make timely payments to for-profit businesses; however, this requirement does not extend to non-profits. She emphasized that this is highly problematic and causes many difficulties for non- profits. She stated that outstanding bills may be up to $100,000 for operations and over $200,000 for capital projects. She said there is no state law requiring the State of Alaska to make timely payments to non-profits. SB 129 would fix this problem. 1:42:26 PM MICHELE GIRAULT, Executive Director, Hope Community Resources, Anchorage, Alaska, testified in support of SB 129. She stated that it is unfortunate that timely bill payment requires legislation. She emphasized that this is a critical need for non-profits that rely on state grants in order to provide services. She briefly described the grant process, noting that grant recipients must often wait up to 90 days to receive payment for services previously provided. SB 129 would correct this error. She shared that late payments have impacted Hope Community Resources (requiring the organization to shift money in order to pay staff) and have significantly disrupted smaller, sister organizations. 1:43:47 PM DAVID WILSON, Director, Public Policy, Mat-Su Health Foundation, Wasilla, Alaska, testified in support of SB 129. He paraphrased from the following written testimony: [Original punctuation provided.] The MSHF is deeply invested and dedicated to supporting the health and well-being of our community, and we recognize the critical importance of timely payments for services rendered. SB 129 addresses a significant issue that affects many nonprofit organizations, municipalities, and Alaska Native organizations, including those we fund and collaborate with. The establishment of a payment deadline will ensure that these entities receive the funds they need to continue their vital work without unnecessary delays. Timely payments are essential for the financial stability of nonprofit organizations. Delays in payment can disrupt operations, hinder project progress, and create financial strain. SB 129 will help provide a reliable payment schedule, allowing these entities to plan and execute their programs effectively. Our organization has witnessed firsthand the challenges faced by nonprofit organizations, municipalities, and Alaska Native organizations due to delayed payments. Through our partnerships and initiatives, we have worked tirelessly to support these entities in their efforts to provide critical services to our communities. The passage of SB 129 will provide much-needed support and resources to amplify these efforts and create lasting, positive change. We believe that SB 129 is a necessary and beneficial measure that will greatly improve the efficiency and effectiveness of nonprofit organizations, municipalities, and Alaska Native organizations. We urge the legislature to pass this bill and support the timely payment of contracts and grants. Thank you for considering our perspective and for your commitment to improving the financial stability and operational efficiency of organizations that serve our community. 1:45:59 PM SUSAN ANDERSON, Chief Executive Officer, Boys and Girls Clubs of Southcentral Alaska, Anchorage, Alaska, testified in support of SB 129. While payments from the State of Alaska are currently averaging 65 days, the Boys and Girls Club of Southcentral Alaska has experienced payment delays of up to 150 days. She said the shorter payment delay is the result of calling and emailing to follow-up on payments. She emphasized that delayed payments disrupt essential services for children, families, and caregivers. She explained that late payments create severe hardships, and the Boys and Girls Club of Southcentral Alaska has been forced to take on debt. In addition, late payments negatively affect planning and vendor payments. She emphasized the importance of SB 129, which would ensure that organizations providing vital services do not take on unnecessary financial instability due to slow reimbursement from state agencies. She stated that the Boys and Girls Club of Alaska is a grant-funded non-profit and cannot pause services or commitments to staff and vendors while waiting to receive payments from the State of Alaska; however, this may be necessary if the delayed payments continue. 1:48:34 PM DEEPIKA RAMESH PERUMAL, Executive Director, Alaska Literacy Program, Anchorage, Alaska, testified in support of SB 129. She said the Alaska Literacy Program (ALP) relies on state funding to keep classes running and to maintain support services. She briefly discussed the impact of late payments, emphasizing that ALP must stretch already limited resources. She explained that ALP has chosen to forgo certain grants (for which the organization is eligible) because of the financial strain late payments cause. She stated that non-profits deserve timely payments. She emphasized the importance of prompt, timely payments, which create greater stability for non-profits across the state. 1:50:55 PM JEN GRIFFIS, Vice President, Policy and Advocacy, Alaska Children's Trust, Anchorage, Alaska, testified in support of SB 129. She said this would strengthen Alaska's communities and families by ensuring both state and federal funds are promptly dispersed to non-profits, local governments, and tribal organizations. She emphasized the many challenges that long delays in payment cause and stated that timely payments are essential for these organizations to execute state policy in an efficient manner. This includes policies that protect and support Alaska's children, youth, and families. She briefly discussed the number of families who depend on public assistance in Alaska, which is equal to 21 percent of Alaska's families with children. She surmised that those families likely also depend on services provided by non-profit, municipal, and tribal organizations across the state. She listed the many programs that have been negatively impacted by delayed payments, including child care and domestic violence services, among others. She emphasized the importance of these programs, which play an important role in preventing child abuse and neglect. She said SB 129 would support the organizations that provide these services to Alaska's families. 1:52:58 PM LAURIE MEAD, representing self, Kenai, Alaska, testified in support of SB 129. She said she has been a licensed childcare provider for 40 years. She said she has experienced 60-90 day delayed payments. She emphasized that delayed payments mean she is unable to pay staff and/or utility bills. She shared a personal anecdote to illustrate how delayed payments have impacted her business. She stated that timely payments for completed work are necessary to keep Alaska running. 1:55:09 PM TOM HIRATSUKA, Chief Financial Officer, Hope Community Resources, Anchorage, Alaska, testified in support of SB 129. He said Hope Community Resources (HCR) receives three operating grants from the State of Alaska. During the previous fiscal year (FY), while the grants started July 1, HCR did not receive payment until October. During that time, HCR had to redistribute funds (over $100,000) in order to pay staff and program costs. He noted potential threats to future funding and reiterated support for SB 129. 1:56:10 PM SARAH HOLLISTER, Executive Director, United Way of the Tanana Valley, Fairbanks, Alaska, testified in support of SB 129. She said that United Way of the Tanana Valley manages a suicide prevention and drug misuse grant for Fairbanks Wellness Coalition. She stated that, in the first year of the grant, they didn't receive payment until after the first quarter. This was after reports were due and meant that the Fairbanks Wellness Coalition (FWC) was not able to provide services for the first quarter. She explained that because the FWC did not receive payment for the first quarter, the grant amount was cut by the amount they should have received during that time. She opined that SB 129 is common sense and emphasized that small organizations that do not have internal funding sources are negatively impacted by delayed payments. 1:57:51 PM ELIA PETERSON, Operations Director, Open Arms Child Development Center, Fairbanks, Alaska, testified in support of SB 129. She emphasized the importance of timely payments, which enable businesses to cover financial responsibilities. She stated that currently, 25 children who attend her facility receive child care assistance. Delayed payments result in late fees and an unpredictable budget. 1:59:34 PM CHAIR MERRICK closed public testimony on SB 129. 2:00:00 PM SENATOR KAWASAKI made closing comments pertaining to fiscal notes. He directed attention to the fiscal note from the Department of Health, [OMB Component Number 2665], which estimates a cost of $150,000 to create a new position that would ensure timely payments. This cost is based on prior contracts and grants. He expressed hope that the Senate Finance Committee would scrub excessive costs from the fiscal notes that accompany SB 129. He then directed attention to the fiscal note from the Department of Labor and Workforce Development, OMB Component Number 340, which indicates that the department would make every effort to change program processes to ensure prompt payments and avoid any interest. He opined that this is ideal. 2:01:38 PM [CHAIR MERRICK held SB 129 in committee.]