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PAYMENT DUE

A payment owed by the School based on a contract executed on, or after, September 1, 1987 is overdue on the 31st day after the date on which the School received the goods under the contract, or the date on which the performance of services under the contract was completed, or the date on which the School received the invoice for the goods, or services, whichever is later.

Gov't Code 2251.021

INTEREST

A payment begins to accrue interest on the date the payment is overdue and bears interest at the rate in effect on September 1 of the fiscal year in which the payment becomes overdue. The rate in effect on September 1 is equal to the sum of:

  1. one percent; and
  2. the prime rate as published in the Wall Street Journal on the first day of July of the preceding fiscal year that does not fall on a Saturday or Sunday.

Interest stops accruing on the distribution date of the warrant issued by the State Comptroller to pay the principal amount owed by the School. The unpaid balance of a partial payment made within the prescribed period accrues interest, unless the balance is in dispute.

Gov't Code 2251.025, 2251.029

The School is liable for any interest that accrues on an overdue payment under Government Code Chapter 2251 and shall pay the interest from funds appropriated or otherwise available to the agency at the same time the principal is paid.

The comptroller shall determine the amount of interest that accrues on an overdue payment by the School under Government Code Chapter 2251 if the comptroller is responsible for issuing a warrant or initiating an electronic funds transfer to pay the principal amount on behalf of the School.

Gov't Code 2251.026(a), (c)

The School may not use funds received from federal grants to pay interest or penalties for an overdue payment to a vendor who provided goods or services purchased with federal grant funds.

2 CFR 200.320

DISPUTED PAYMENT

The School shall notify a vendor of an error in an invoice submitted for payment by the vendor not later than the 21st day after the date the School receives the invoice. If a dispute is resolved in favor of the vendor, the vendor shall receive interest on the unpaid balance beginning on the date that the payment for the invoice is overdue. If a dispute is resolved in favor of the School, the vendor shall submit a corrected invoice that shall be paid within 30 days of receipt. The unpaid balance accrues interest if it is not paid by the appropriate date.

Gov't Code 2251.042

EARLY PAYMENT DISCOUNT

The School shall attempt to take advantage of an offer for an early payment discount, but may not take an early payment discount unless it makes a full payment within the discount period. If the School takes an early payment discount later, the unpaid balance accrues interest beginning on the date the discount offer expires.

When paying for the goods or service purchased under an agreement that includes a prompt or early payment discount, the School shall submit the necessary payment documents or information to the comptroller sufficiently in advance of the prompt or early payment deadline to allow the comptroller or the School to pay the vendor in time to obtain the discount.

Gov't Code 2251.030

EXCEPTIONS

These provisions do not apply to payments made by the School, or a vendor, if:

  1. There is a bona fide dispute between the School and a vendor, contractor, subcontractor, or supplier concerning the goods delivered, or the services performed that causes the payment to be late;
  2. There is a bona fide dispute between a vendor and a subcontractor or between a subcontractor and its supplier about the goods delivered, or the services performed, that causes the payment to be late;
  3. The terms of a federal contract, grant, regulation, or statute prevent the School from making a timely payment with federal funds; or
  4. The invoice is not mailed to the person to whom it is addressed in strict accordance with any instructions on the purchase order relating to the payment.

Gov't Code 2251.002;

ALTERNATE VENDOR REMEDY FOR NONPAYMENT OF CONTRACT

A vendor may suspend performance required under a contract with a school district if the district does not pay the vendor an undisputed amount within the time limits provided above and the vendor gives the school district written notice informing the district that payment has not been received and stating the intent of the vendor to suspend performance for nonpayment.

The vendor may not suspend performance before the tenth day after the date the vendor gives this notice.

A vendor who suspends performance is not required to supply further labor, services, or materials until the vendor is paid the amount provided for under Government Code Section 2251, plus costs for demobilization and remobilization. The vendor is also not responsible for damages resulting from suspending work if the governmental entity with which the vendor has the contract has not notified the vendor in writing before performance is suspended that payment has been made or that a bona fide dispute for payment exists.

A notification under Government Code 2251.051(c)(2) that a bona fide dispute for payment exists must include a list of the specific reasons for nonpayment. If a reason specified is that labor, services, or materials provided by the vendor or the vendor's subcontractor are not provided in compliance with the contract, the vendor is entitled to a reasonable opportunity to cure the noncompliance of the listed items; or offer a reasonable amount to compensate for listed items for which noncompliance cannot be promptly cured.

Gov't Code Sec. 2251.051

Adopted:          11/17/95

Amended:        5/28/03, 11/19/04, 1/29/16

Reviewed:        11/16/07