Deferred-payment commodity contracts; preaudit review.

(1)(a) When any commodity contract requires deferred payments and the payment of interest, such contract shall be submitted to the Chief Financial Officer for the purpose of preaudit review and approval prior to acceptance by the state.

(b) Contracts executed pursuant to this subsection may bear interest at a rate not to exceed an average net interest cost rate which shall be computed by adding 150 basis points to the 20 “bond buyer” average yield index published immediately preceding the first day of the calendar month in which the contract is submitted to the Chief Financial Officer for preaudit review and approval.

(2)(a) No funds appropriated shall be used to acquire equipment through a lease or deferred-payment purchase arrangement unless approved by the Chief Financial Officer as economically prudent and cost-effective.

(b) The Chief Financial Officer shall establish, by rule, criteria for approving purchases made under deferred-payment contracts which require the payment of interest. Criteria shall include, but not be limited to, the following provisions:

1. No contract shall be approved in which interest exceeds the statutory ceiling contained in this section. However, the interest component of any master equipment financing agreement entered into for the purpose of consolidated financing of a deferred-payment, installment sale, or lease-purchase shall be deemed to comply with the interest rate limitation of this section so long as the interest component of every interagency agreement under such master equipment financing agreement complies with the interest rate limitation of this section.

2. No deferred-payment purchase for less than $30,000 shall be approved, unless it can be satisfactorily demonstrated and documented to the Chief Financial Officer that failure to make such deferred-payment purchase would adversely affect an agency in the performance of its duties. However, the Chief Financial Officer may approve any deferred-payment purchase if the Chief Financial Officer determines that such purchase is economically beneficial to the state.

3. No contract shall be approved which extends payment beyond 5 years, unless it can be satisfactorily demonstrated and documented to the Chief Financial Officer that failure to make such deferred-payment purchase would adversely affect an agency in the performance of its duties. The payment term may not exceed the useful life of the equipment unless the contract provides for the replacement or the extension of the useful life of the equipment during the term of the loan.

(c) The Chief Financial Officer shall require written justification based on need, usage, size of the purchase, and financial benefit to the state for deferred-payment purchases made pursuant to this subsection.

(3) This section does not apply to the Legislature.

(4) For purposes of this section, deferred-payment commodity contracts for replacing the state accounting and cash management systems may include equipment, accounting software, and implementation and project management services.

(5) For purposes of this section, the annualized amount of any such deferred payment commodity contract must be supported from available recurring funds appropriated to the agency in an appropriation category, as defined in chapter 216, that the Chief Financial Officer has determined is appropriate or that the Legislature has designated for payment of the obligation incurred under this section.