State law sets payment and reporting rules for targeted funds

State agencies must use written agreements to distribute certain funds lawmakers direct to specific organizations. These rules cover grants, loans, or other financial help authorized by law for a specific organization. They exclude emergency funds, funds for specified public agencies and public colleges, formula or competitive grant programs, and State Bond Commission funds. For awards of $150,000 or less, the agency must pay in advance or use a payment schedule in the agreement. For larger awards, the agency may pay some money in advance and the rest in later payments or after the recipient documents eligible expenses. Reimbursement rules must not block nonprofits or community groups from using the funds; agencies must decide reimbursement claims within 45 days and pay undisputed claims within 45 days. Before a recipient passes funds to another organization, it must get written approval from the state agency and, when required by agency rules, the budget secretary. These rules take effect July 1, 2026.

A state agency may agree to provide funds at lawmakers’ direction only when an act appropriates the money and identifies the intended recipient and purpose. This applies when a state agency agrees to provide money or other financial help to a specific organization at the General Assembly’s direction. The act or the State Budget Agency Sheets issued by August 1 each year must identify the organization, describe how it will use the money, and provide the same information for any subrecipient. These identification rules do not cover the funding types excluded from the law’s definition of legislatively directed funds. This requirement takes effect July 1, 2026.

State agencies generally may not use Other Expenses money for grants or pass-through payments without a specific appropriation for that purpose. This covers money appropriated to executive branch state agencies for Other Expenses and paid as financial help, grants, or other payments to recipients. An agreement already in effect on July 1, 2026, may continue temporarily under its existing terms if it conflicts with this rule. Agencies must review such obligations, and the budget secretary must plan how to reclassify or reallocate them. Starting July 1, 2027, agencies may not enter or continue such an obligation unless lawmakers reclassify or expressly authorize it. Its amount and duration cannot increase. The rule takes effect July 1, 2026. Agencies must review existing obligations by January 1, 2027; the limits on entering or continuing them apply starting July 1, 2027.

Recipients and agencies must report on the use of certain funds, and the state must publish a public database of them. These reporting and database duties cover legislatively directed funds administered by state agencies. Recipient reports must cover the recipient’s use of the funds and, if applicable, a subrecipient’s use. State agency reports must summarize recipient reports or say the agency did not administer these funds. The budget secretary must also report quarterly on the status and payments of current-year funds. If the governor reduces an allotment for these funds, the secretary must notify legislative leaders within seven days and explain why. Quarterly reports begin by October 1, 2027. Recipient reports are due by January 1, 2028, and agency reports by March 1, 2028. The database must be published by June 30, 2028, and at least annually thereafter.