A bill for an act relating to indirect costs charged to state-funded grants, and including applicability provisions.

This bill sets a 5% cap on indirect costs (administrative expenses like management, payroll, and facility costs) charged to state-funded grants in Iowa, effective July 1, 2026. It directly affects grant recipients (including nonprofits, local governments, schools, and for-profits) and state departments administering grants by requiring them to: 1) Separate direct and indirect costs in budgets, 2) Prohibit reclassifying indirect costs as direct costs to bypass the cap, and 3) Maintain documentation for audits. State departments must enforce the cap during grant approval and monitor compliance, with disallowed costs recoverable from grantees.