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PUBLIC TESTIMONY
Testimony by Greg Klemm, Chief Financial Officer of Legal Services NYC
1:49:02
ยท
135 sec
Greg Klemm, CFO of Legal Services NYC, testified about the challenges faced by nonprofits in the city's contracting and reimbursement process. He highlighted issues with changing invoice requirements, delays in budget approvals, and late funding confirmations, all of which strain nonprofits' cash flow.
- Klemm described an "incredibly onerous and ever changing review process" for invoice submissions, with requirements often changing month-to-month.
- He emphasized the need for more staff at city agencies, particularly the Office of Civil Justice at DSS, to handle the workload.
- Klemm urged the city to provide advances of 50% of the Indirect Cost Rate (ICR) funding based on the prior year's rate to address delays in ICR approvals.
Greg Klemm
1:49:02
Good afternoon, chair one and members of counsel.
1:49:05
My name is Greg Clem, the Chief Financial Officer at Legal Services NYC.
1:49:10
Thank you for the opportunity to testify today.
1:49:13
So my colleague Lisa was just describing the budget approval process.
1:49:18
However, unfortunately the challenges don't end after the budgets are approved.
1:49:23
When submitting invoices we face an incredibly onerous and ever changing review process in order to get reimbursed for the work we perform on city contracts.
1:49:33
I say ever changing because the requirements of the information that we are asked to provide along with invoices often change from month to month.
1:49:42
Something that was discussed and settled in prior months is often resurfaced again in future months.
1:49:48
As you can imagine this adds time to the review and payment process.
1:49:52
And at this point the clock has already been ticking for weeks or months on expenses that we have already laid out to perform the work.
1:50:01
Once the requirements are cleared up and the invoices are submitted, they will often sit for several weeks without even being touched.
1:50:09
At some agencies and in most case for us at this table, it's the Office of Civil, Justice at DSS, there appears to be not enough staff to keep up with all of the work.
1:50:21
All of these things place considerable strain on cash flow requiring us to seek advances from other funders and just to underscore that we have to seek advances from other funders to do work for the city or make draws on our lines of credit.
1:50:35
Another way payments are often delayed is when funding is confirmed late.
1:50:40
In our example, for indirect cost rate funding or the ICR.
1:50:45
ICR funding is crucial because it provides funding for essential administrative costs that social service orgs need to keep operations running.
1:50:53
Organizations currently go through an application process with mocks every three years.
1:50:58
However the ICR is often not approved until very late in the fiscal year or even worse months after the year has already ended.
1:51:05
To help address this issue, as you will note in our recommendations in the written testimony, we urge the city to provide advances of 50% of the ICR initiative based on the prior year's rate.
1:51:17
Thank you.