C.R.S. § 24-17-302: Dispensation of payments under grant agreements with nonprofit grantees.

(1) Notwithstanding any provision of law to the contrary, an administering state agency may advance a payment to a grantee only for a state-funded grant subject to the following requirements:

(a) The administering state agency shall:

(I) Have an existing process or develop a new process that is approved by the state controller to dispense an advance payment pursuant to this section;

(II) Disclose the availability of advance payment in any notice of a grant funding opportunity, grant solicitation, request for applications, or other announcement issued to prospective grantees. The disclosure must include:

(A) The eligibility criteria and documentation required to request an advance payment pursuant to this section;

(B) The process by which a grantee may request an advance payment from the administering state agency; and

(C) The approval process of the advance payment request;

(III) Ensure that any advance payment to a grantee is the minimum amount needed to achieve the outcome of actual, immediate cash requirements of the grantee in carrying out the grant objective; and

(IV) Use the office of the state controller's risk assessment tool to determine whether a grantee is high, medium, or low risk and allow advance payment only to a grantee that is determined to be low risk. An administering state agency may modify the considerations in the risk assessment tool depending on the specific situation.

(b) The grantee shall:

(I) Provide an itemized budget to the administering state agency for the eligible costs that the advance payment will cover, the indirect or other costs that the grantee needs to operate, a spending timeline, and a workplan developed in a form and manner specified by the administering state agency;

(II) Submit documentation, as required by the administering state agency, to support the need for advance payment, which may include invoices, contracts, estimates, payroll records, and financial records to demonstrate the minimum amount needed to achieve the grant objective and be timed with actual, immediate, cash requirements of the grantee;

(III) If required by the administering state agency and stipulated within the grant agreement, obtain insurance in an amount commensurate with the assessed risk determined by the administering state agency pursuant to subsection (1)(a)(IV) of this section;

(IV) Establish procedures to minimize the amount of time that elapses between the transfer of money and the expenditure of the money by the grantee;

(V) Provide a progress report to the administering state agency following the expenditure of an advance payment that includes a summary of work completed, proof of expenditure, and other associated information as determined by the administering state agency; and

(VI) Disclose its internal controls including the background of the grantee's management, the management's commitment to integrity and ethical values, a risk assessment that identifies the risks of achieving the objectives of the grant, control activities such as authorization and segregation of duties, preventative, detective, and corrective controls, information systems including the financial system that will be used to track and report grant spending, and monitoring of the grant.

(c) Advance payments authorized pursuant to this section are limited to the minimum immediate cash requirement of the grantee that are necessary to achieve the grant objective. The grantee shall propose the minimum amount needed to achieve the grant objective and the controller of the administering state agency shall review and determine whether to accept the amount or propose an alternative amount based on the requirements specified in subsections (1)(a) and (1)(b) of this section. The controller of the administering state agency shall forward advance payment requests to the state controller for approval.

(2) A grantee shall return to the administering state agency all unused money provided as an advance payment but not expended within the grant agreement timeline.

(3) A grantee that is paid a percentage of the total value of the payments under a grant agreement with an administering state agency immediately upon executing the grant agreement must comply with all of the reporting requirements specified in the grant agreement.

(4) If an administering state agency or the office of the state controller denies a grantee's request for advance payment, the administering state agency shall provide the grantee with a written explanation of the deficiencies in the application for advance payment that determined the decision to deny the request. The administering state agency shall make the elements and results of the risk assessment determined pursuant to subsection (1)(a)(IV) of this section available to the grantee.

(5) Nothing in this section prevents an administering state agency, in providing funding to a grantee as described in this section, from using a waiver process available through fiscal rules adopted by the state controller or rules adopted by a federal governmental entity to dispense a percentage of the total value of the payments under the grant agreement to the grantee immediately upon executing or renewing the grant agreement.

(6) Nothing in this section limits, prohibits, or supercedes any existing payment or grant-making authority or powers of a state agency.