Illinois lawmakers seek to streamline contracting for service providers

CHICAGO — Community Assistance Programs, a Chicago-based nonprofit providing employment training and job placement, typically has to wait several months for payment from the state.

Through a government contract, the organization has served more than 2,000 people per year in Illinois. But the state, in return, has not always made that easy, CEO Sheryl Holman said. Late payments and contract delays have created significant barriers for businesses like hers.

In February, Holman submitted a bill to the state for contracted services provided the month before. The state finally paid the nonprofit in April, she said.

“It’s like everything’s against you doing this,” Holman said.

Community Assistance Programs is not the only organization expressing frustration with the state’s contracting processes. According to a 2023 survey of human services government contractors by the Health and Human Services Coalition of Illinois, a group of Illinois human services providers, at least 25% of state contracts were not paid on a timely, ongoing basis.

The issue was especially prevalent for nonprofit contractors with small budgets and those serving or led by people of color, the survey found.

“The most unconscionable thing is that the poorest neighborhoods were the ones that were not getting paid on time,” said Holman, referencing the survey. “So it puts some agencies out of business, because they can’t weather it.”

During the state’s two-year budget impasse that spanned parts of 2015-2017, Illinois’ backlog of unpaid bills ballooned to over $16 billion. But over the past nine years, it’s been whittled down, routinely hovering about $1.5 billion to $2 billion. A representative from the Illinois Comptroller’s office, which processes and pays vouchers, said the office typically pays within 14-15 business days.

But the Comptroller’s office only tracks them based on the date received. Bills can be further delayed if the state agency involved in the contract doesn’t send them to the comptroller’s office in a timely fashion.

House Bill 4340 aims to address delays occurring at the agency level. It does so by stating that agencies must send vouchers to the comptroller “within 30 calendar days of receipt” of a “proper” bill or invoice from a contractor. Agencies would also have 30 days to notify contractors of defects in a bill or invoice.

In addition to late payments, contractors have also faced delays in receiving state contracts. According to the Health and Human Services Coalition study, over half of the respondents said that in fiscal year 2023, they did not receive their contracts before the start of the year. Late contracts can prevent organizations from providing services right away.

Lauren Wright, executive director of Chicago nonprofit Illinois Partners for Human Service, said the government contractor survey was focused on finding “the biggest hurdles” in the contracting process for community-focused nonprofits dealing with the state. And, she said, what they found was there were barriers “at all stages of the process.”

State Sen. Mike Halpin, D-Rock Island, sponsor of the reform bill, said he hopes the package will “make government easier to work with,” especially for small nonprofit agencies.

“Many of these nonprofits are, rightfully so, hyper-focused on the mission and the services that they provide, and it can be overly burdensome for them to try to apply for state grants, because of the paperwork delays and getting approval, delays in getting the money in hand,” Halpin said. “And so they face challenges that are different from some of the bigger vendors or bigger contractors that do business with the state.”

Legislative package

Aside from the measure addressing voucher delays, HB 4340 also requires that contacts be issued within 60 days of the start of the fiscal year or 60 days after the required documentation has been completed and makes changes to the Court of Claims process, the channel through which contractors can seek out late payments.

If signed, HB 4340 will require that the court confirm, reject or notify the vendor of any issues for claims under $2,500 within 60 days of being notified of the claim by the attorney general. For claims $2,500 and over, the window is 90 days. The bill also raises the cap on awards that can be temporarily paid from the General Revenue Fund from $50,000 to $100,000.

Halpin said that the bills required negotiations between contractors and state agencies.

“We have to strike a balance between maintaining convenience and participation on the part of the organizations, but without compromising the integrity and the transparency and the responsibility that we have as a state to make sure that taxpayer money going out the door, goes out in an appropriate way,” he said.

In a statement to Capitol News Illinois before the bill was passed, a spokesperson from Gov. JB Pritzker’s office said the office will monitor and review the legislation’s budgetary impacts.

“Any legislation that requires additional state resources will be carefully reviewed with budgeteers to understand the fiscal impact,” the spokesperson said in a statement.

The spokesperson did not respond to a question about contractors’ reports of delays in contracting and payment.

Federal uncertainty

Since President Donald Trump began his second term, key sources of funding for human service providers have undergone significant cuts. The coalition pushed for the contracting reforms contained in HB 4340 as Illinois nonprofits grapple with the repercussions of these federal funding cuts.

At an April panel hosted by the Civic Federation, a nonprofit government research organization, Wright and other nonprofit leaders discussed how organizations in Illinois are navigating these changes.

Jewish United Fund Chief Impact Officer Emily Sweet said these changes are forcing organizations to make difficult decisions about which services to continue offering. She said the cuts have also encouraged organizations to collaborate with similar providers and search for new ways to collaborate.

At the panel, Wright explained that even without an influx of state money, there are things the state can do to help human services providers during this difficult time. Among them, she said, are the state efficiencies the contracting bills would create.

“And providers already know how to be efficient, because they have been stretching the dollar more than anyone for decades,” Wright said.

Hannah Webster is an undergraduate student in journalism with Northwestern University’s Medill School of Journalism, Media, Integrated Marketing Communications, and a fellow in its Medill Illinois News Bureau working in partnership with Capitol News Illinois.

Capitol News Illinois is a nonprofit, nonpartisan news service that distributes state government coverage to hundreds of news outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.