The latest attempt to solve the city’s chronically late payments to its nonprofit contractors is coming courtesy of City Council leaders, who proposed a package of bills and new spending on Thursday that they say will ease the crisis.
The city relies on nonprofits to handle crucial work like homeless services, day care and mental health treatment. But City Hall registered about 91% of those human services contracts after their start date during the last fiscal year, forcing those vendors to work for free since they cannot be paid until their contracts are approved by the comptroller. The yearslong pattern has compelled vendors to take out loans and lines of credit to pay their staff, and forced at least two prominent nonprofits — the planning group Hester Street Collaborative and youth services organization Sheltering Arms — to shut down entirely in the last two years.
The first new bill, by Council Speaker Adrienne Adams, would require city agencies to pay about 80% of a contract’s annual value immediately when it is registered — up from the 30% advance that is currently typical. For multi-year contracts, the city would need to again pay 80% of the value at the start of each fiscal year.
While mandating up-front payments raises the question of how the city would hold vendors accountable for lackluster performance, the speaker’s bill would authorize the city to reclaim its money in cases where a contractor fails to complete its assigned work.
The second bill, by Finance Committee Chair Justin Brannan, would require city agencies to submit corrective action plans if they registered more than 30% of their contracts — or 30% of their contracts’ dollar value — at least 90 days after their start dates in a given year. Those plans would need to analyze the causes of the delays and outline improvements, including performance targets for the next fiscal year.
Finally, the council wants to increase funding for the Mayor’s Office of Contract Services, whose short-staffing has been blamed for exacerbating delays. The office has a budget of $37.8 million in Mayor Eric Adams’ preliminary plan for the next fiscal year, but only 180 employees despite a budgeted headcount of 225. The council did not say how much it would push to add to MOCS’ budget, but signaled it will push the issue as it negotiates with City Hall on a Fiscal Year 2026 budget due June 30.
“Payment delays in the city’s contracting process are threatening the survival of service providers, putting the entire sector, workers, and New Yorkers at risk,” Speaker Adams said in a statement. The bills have been scheduled for an April 30 hearing.
Michelle Jackson, executive director of the Human Services Council, told Crain’s that she supported the bills and said the new MOCS funding would be “absolutely critical.”
“A lot of what the sector is experiencing is a management issue and some of that has to do with the staff,” said Jackson, whose group advocates for human services nonprofits.
Jackson said the speaker’s up-front payment bill could be helpful in improving late invoices — a problem that she said has worsened under the Adams administration — but noted that it would not address the more widespread problem of late registration, the main source of delayed payments.
The mayor’s office did not immediately respond to a request for comment on the proposals.
Speaker Adams first hinted at the bills in her March State of the City speech, which came shortly before she announced her own run for mayor. Indeed, calling attention to the late-payment crisis could bring electoral benefits: Some nonprofits are major political players, and Brannan, her top deputy on fiscal issues, is running for comptroller.
The mayor’s office has insisted it is making progress on the issue, pointing to its success clearing a $6 billion backlog in overdue payments. A 2023 reform slashed months of processing time for the subset of nonprofits that get discretionary funds awarded by City Council members. In January, Adams issued an executive order requiring each city agency to appoint a “chief nonprofit officer” focusing on payment issues, and convened a working group led by Ana Almanzar, the deputy mayor for strategic initiatives, focused on payment delays.
“The Adams administration has cleared backlog of contracts and payments, unlocked billions owed to nonprofits, provided numerous tools and resources to providers and agencies to register contracts on time, and, most recently, established Chief Nonprofit Officers at contracting agencies,” said Yexenia Markland, a spokeswoman for the Mayor’s Office of Contract Services, who said the administration was still reviewing the council’s proposals.
Still, as of last month, the crisis was “the worst it’s ever been,” said Jackson, who said she is hearing from unprecedented numbers of member groups who are missing payroll or maxing out their lines of credit.
Current Comptroller Brad Lander has worked with the Adams administration to try to tackle the issue — although Lander has also criticized City Hall for taking too long to implement promised reforms, such as a “ContractStat” database that would closely track payments. Lander’s office did not directly weigh in on the council proposals in response to questions.
“By registering human service contracts late 90% of the time, we are failing nonprofit providers who shelter our homeless, provide afterschool programs, and feed our homebound seniors,” Lander said in a statement. “Our office continues its commitment to reviewing contracts well within our mandated timeframe, but the mayoral administration’s procurement review needs long overdue reforms.”
