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Reimbursement Policy for Earmarks Raises Concern
08/25/08 - 01:27 AM
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BATON ROUGE, La. (AP) — Nonprofits worry a new restriction on state funding pushed by Gov. Bobby Jindal’s administration could leave them unable to access dollars earmarked by lawmakers.

The concern centers on a recommendation that the state reimburse their costs, rather than pay out dollars upfront.

The administration calls reimbursement an accountability measure to ensure the money is spent as planned. But some nonprofits, which mainly rely on donations and grants, say they are uncertain they can float expenses until reimbursement. They also worry about how long the reimbursement process will take.

“It’s not like nonprofits have a lot of unencumbered funds lying around to use until they get their reimbursements,” said Ashley Herad, director of public policy for the Louisiana Association of Nonprofit Organizations.

The tighter standards apply to earmarks legislators added to this year’s budget for nongovernment organizations, called NGOs. Lawmakers added money for 370 NGOs for the fiscal year that began July 1, but only 152 escaped Jindal’s line-item veto, totaling nearly $18 million.

Earlier this month, Jindal put tougher reporting requirements in place. Herad and leaders of several nonprofits said they don’t object to filing detailed reports that account for their spending.

“I don’t have problems with the reporting procedures in place. I don’t think it makes sense to have taxpayer money spent without accountability,” said Anna Fogle, president of Prevent Child Abuse Louisiana, which was allocated $125,000 for a program that teaches parents how to keep children away from Internet predators.

However, some nonprofit leaders worried about guidelines issued by the Division of Administration that suggest state agencies that write the checks to NGOs should pay only as reimbursement after the organizations spend on their services and document them. Such contracts often exist between state agencies and nonprofits that aren’t individually added to the budget by lawmakers.

Fogle said in reimbursement contracts, the state often takes up to six months to refund the spending. She said that’s difficult for smaller nonprofits to manage. She said private foundations regularly provide grant dollars upfront while requiring detailed reporting to prove the dollars were spent the way they were intended.

“There’s really no reason that the state can’t follow a similar model,” Fogle said. “Certainly, I don’t know many nonprofits that have a huge cash reserve and can make themselves float.”

Herad said reimbursement delays are a continual problem for nonprofits that work with the state — outside of the earmarks from lawmakers — with complaints of waiting as long as 120 days to get reimbursed for work and services.

Commissioner of Administration Angele Davis said the guidelines ensure tax dollars are spent the way lawmakers intended.

“We encourage NGOs to work closely with state agencies to provide the necessary information so that reimbursements occur in a timely manner. Likewise, the agencies are encouraged to be responsive,” Davis said in an e-mailed statement when asked for a response to the concerns.

The executive director of the Louisiana chapter of the ALS Association, Kelly Viator, said she’s confused about how the reimbursement process will work. Division of Administration guidelines suggest reimbursement but leave it up to individual agencies doling out the dollars to determine the process.

“I’ve heard nothing about what is actually going to happen,” Viator said.

The ALS Association, which helps people with the nerve cell-damaging illness commonly called Lou Gehrig’s disease, is allocated $150,000 in this year’s budget to provide home-based care services to ALS patients who aren’t currently getting help from the state. Viator said she can’t start the program without the earmark.

“We don’t have the money to do those (services) today, so we haven’t fundraised for this program specifically,” she said.

Lawmakers complained last year that a reimbursement policy by then-Gov. Kathleen Blanco slowed the flow of money to the organizations. Blanco scrapped the requirement after then-Attorney General Charles Foti said in an opinion that she overstepped her authority and the policy was “an improper encroachment” on the Legislature’s constitutional power to appropriate money.

Jindal administration guidelines give a few exceptions for ways NGOs could receive an upfront check, rather than a back-end reimbursement.

If the money is given upfront, the NGO must provide a business plan explaining that the state cash is the only source of funding available for the purpose described in the budget and that the services can’t be provided without the money, according to the Division of Administration guidelines.

If the money is for equipment, the dollars can be doled out in advance to the NGO when the organization provide documents explaining that’s the only source of money available for the purchase, according to the guidelines.

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