1. Are there any rules, regulations, or laws that specifically prohibit advance payments or prepayments?
Any department which, as a part of its regular operations, performs work for other departments may require payments in advance (Government Code [GC] Section 11258; State Administrative Manual [SAM] Section 8471.1)
Advance payments between departments are permissible to mitigate an adverse effect to the ap propriation of the performing department (GC Section 11257; SAM Section 8453).
Under certain conditions, specific departments may advance payment to a community-based private nonprofit agency (GC Section 11019).
Under certain conditions, departments, except the Department of Social Services, may advance payment to a county (GC Section 11019.5).
The office revolving fund may be used to advance payment for federal publications, postage, meter services, travel expenses, and registration fees (GC Section 16401; SAM Sections 8110-8116).
Subject to all federal provisions and Department of Finance approval, departments may advance payment of federal block grants to contractors or local governments (GC Section 16366.7).
2. Can departments pay claims against reverted appropriations from current appropriations? Does Department of Finance (Finance) need to approve reverted year claims?
Finance approval is not required for such claims.
3. Can departments use current year appropriations to pay for services and/or goods to be delivered in the next fiscal year?
Expenditures/encumbrances are charged to the fiscal year that the purchase agreement is issued when the delivery date is construed to mean as soon as possible. As soon as possible includes a delivery date that is:
Not identified or specific.
Specific but not a requested delay in delivery.
Specified as 10 days, 30 days, or the like.
An agreement is issued as of the date it is “made and entered into”. Any required control agency approvals are retroactive to that date.
Agreements which cross fiscal years may be charged totally to the first year of appropriation or more than one fiscal year, depending on the:
Details of the agreement
Above delivery date criteria
4. What laws and/or rules regulate acceptance of gifts?
Unconditional monetary gifts which must be deposited in the State School Fund (GC Sections 11005, 16302; SAM Section 8634).
Monetary gifts where the only condition is the designation of a particular fund in the State Treasury (GC Sections 11005, 16302; SAM Section 8634).
Departments or funds statutorily exempted from Finance approval (GC Section 11005; SAM Section 8634).
See additional information, including a form for departments to request Finance approval to accept a gift.
5. How are late payment penalties calculated?
The California Prompt Payment Act (Act) requires State departments to automatically calculate and pay late payment penalties if they do not make payments for the following: 1) properly submitted, undisputed invoices; 2) victim services or prevention program grant claims; 3) refunds; or 4) other undisputed payments due to individuals, by the date required in the Act.
The payment due date is 45 calendar days of receipt of the invoice or from notice of refund or other payment unless otherwise specified in a contract or grant. State departments shall pay penalties if a correct claim schedule is not submitted to the Controller within 30 calendar days and payment is not issued within 45 calendar days. The Controller shall pay penalties if payment is not issued within 15 calendar days of receipt of the correct claim schedule and payment is not issued within 45 calendar days. Payment is defined as the issuance by a warrant or a registered warrant by the Controller, or the issuance of a revolving fund check by department. Departments must pay the applicable penalties without requiring an additional invoice for the penalty amount (GC Section 927 et seq.).
The Act requires different rates for penalty payments as follows:
Small Businesses, Nonprofit Organizations and Nonprofit Public Benefit Corporations (may include grantees for victim services and prevention programs): the penalty rate, per annum, is a rate of 10 percent above the United States Prime Rate on June 30 of the prior fiscal year. However, a nonprofit organization shall only receive a penalty payment if it has been awarded a contract or a grant for victim services and prevention programs that is less than $500,000. Penalties of $10 or less will not be paid. (GC Sections 927.6 and 927.7; SAM Section 8474 et seq.).
Other Businesses (including local government grantees that provide victim services and prevention programs): the penalty rate, per annum, is 1 percent above the Pooled Money Investment Account daily rate as of June 30 of the preceding year. Penalties of $100 or less will not be paid. (GC Section 927.6; SAM Section 8474 et seq.)
Refunds and other payments due to individuals: the penalty rate, per annum, is 1 percent below the Pooled Money Investment Account daily rate. Penalties of $10 or less will not be paid. (GC Section 927.13: SAM Section 8474 et seq).
Finance annually issues a Budget Letter informing departments of the annual and daily penalty rates.
The penalty payment is charged to the fiscal year based on the payment due date.
Penalties calculated using a payment due date in the prior fiscal year (prior July 1 to June 30) are prior year expenditures. The penalty is calculated at the prior year rate and paid from a prior year appropriation.
Penalties calculated using a payment due date in the current fiscal year (July 1 forward) are current year expenditures. The penalty is calculated at the current year rate and paid from a current year appropriation.
Note: Current year penalties are not payable until a current year Budget Act has been enacted.
6. What is the definition of equipment? What costs are recorded in the property register?
The acquisition cost of all property, capitalized and non-capitalized, is included in the property register. All costs to acquire, install, and prepare property for its intended use are included in the acquisition cost. This amount is used to determine if the property meets the capitalization criteria. See SAM sections 8615 and 8635 for further criteria on intangible and internally generated intangible assets. The capitalized segment of the property register also serves as the subsidiary ledger to the Capital Assets Group of Accounts (SAM section 8600 et seq.).
7. What is a Payee Data Record (STD. 204) and why must the payee complete it before the State can make a disbursement?
The purpose of the Payee Data Record (STD. 204) form is to obtain payee information for income tax reporting and to ensure tax compliance with state and federal law. A STD. 204 is required for any non-governmental entity or individual entering into a business transaction that may lead to a payment from the state as described in SAM section 8422.190, Obtaining Payee Information (STD. 204). Therefore, a completed, dated, and signed STD. 204 with handwritten or electronic signature must be on file with the state before payments are disbursed. Note: Non-state employees authorized to receive travel expense reimbursements directly from departments must also complete a STD. 204. If a payment is reportable to the IRS and/or the FTB, the state prepares an Annual Information Return for the Taxpayer Identification Number (TIN) provided by the payee on the STD. 204. The payee will follow the instructions on the STD 204 in accordance with Internal Revenue Code section 6109(a); and, Revenue and Taxation Code sections 18646 and 18661. Use form STD 205, Payee Data Record Supplement to provide the payee’s remittance address information if different from the mailing address on the STD 204.
8. Why is the State exempt from the Utility Users Tax assessed by local governmental entities?
9. Is there a glossary or a definition for each expenditure object code listed in the Uniform Codes Manual (UCM)?
10. Can departments issue agency checks when the current year Budget has not been passed?
Issue refunds (SAM Section 8095).
Remit money to the State Treasury (SAM Section 8091).
Purchase or buy back dishonored checks from the bank (SAM Section 8043).
Departments can disburse revolving fund cash for:
Prior fiscal year payments (SAM Section 8110).
Payment to an employee for salary earned when errors or delays prevent the payroll warrant from being delivered (SAM Section 8595).
11. How should CAL-Card rebates be recorded?
The CAL-Card rebate is a performance bonus that is distributed by the credit card company to departments for timely payment of invoices. Because the rebate cannot be identified to a specific invoice or vendor, the bonus will be classified as Miscellaneous Revenue for those departments whose primary funding source is a governmental cost fund. Departments whose primary funding source is a nongovernmental cost fund will use Operating Revenue, Other.
12. How do departments obtain FSCU approval, as required by some sections of the State Administrative Manual (SAM), or fiscal policy clarification/assistance? How long does the process take?
The request must include all pertinent information necessary to review the request such as:
Description of request; including description of current process if change is proposed
Information required in applicable SAM section
Justification for request
Listing of costs and/or dollar amounts involved
Completed forms, if required (e.g., form AUD-10 for Special Deposit Fund accounts)
Contact name, email address, and telephone number
Please include the email address and telephone number of a contact person so that we can acknowledge the receipt of your request. The request will be assigned to an analyst for review. A written response will be provided in approximately 3 to 4 weeks.
13. Is FSCU responsible for the content in all sections of the State Administrative Manual (SAM)?
No, FSCU is only responsible for specific sections of SAM. The responsible department and contact person for all SAM sections are listed in SAM Section 0030.