Bill
AB 880
Bill Summary: AB 880 - State government grants and contracts: payment of claims and grantees' indirect costs OverviewAB 880 is a bill introduced in the California State Legislature
AB 880 is a bill introduced in the California State Legislature on February 19, 2025. The bill aims to address issues related to the payment of claims and indirect costs for state government grants and contracts.
The main provisions of AB 880 include:
Prompt Payment of Claims: The bill would require state agencies to pay valid claims from grantees and contractors within 45 calendar days of receipt. This is intended to improve cash flow and reduce financial burdens for organizations receiving state funding.
Indirect Cost Reimbursement: AB 880 would mandate that state agencies reimburse grantees for their federally-negotiated indirect cost rates, or a minimum 10% indirect cost rate if a federal rate has not been established. This ensures grantees can recover a portion of their overhead expenses.
Indirect Cost Flexibility: The bill allows grantees to use either their federally-approved indirect cost rate or the minimum 10% rate, whichever is higher. This provides more flexibility in recovering indirect costs.
Reporting Requirements: State agencies would be required to report annually on the timeliness of their payments to grantees and contractors, as well as the indirect cost reimbursement rates provided.
AB 880 would primarily impact:
The bill is currently in committee and its first hearing has been canceled at the request of the author. Additional hearings and votes would be required for the bill to advance through the legislative process.
If enacted, the provisions of AB 880 would take effect on January 1, 2026, providing state agencies and grantees time to prepare for the new requirements.
Compiled from official sources — confirm details with the bill’s official record.
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