IA HSB642

Caps indirect costs charged to state-funded grants at 5% of the total grant amount, establishing a uniform statewide limit across all departments and establishments.

Defines key terms including "direct cost" (expenses directly assignable to a program), "indirect cost" (shared administrative expenses like executive management, accounting, HR, and utilities), and "grant" (state-funded monetary awards excluding loans, tax expenditures, and procurement contracts).

Prohibits grantees from reclassifying indirect costs as direct costs to circumvent the cap, and bars departments from waiving the cap unless expressly authorized by law.

Requires grant budgets to separately identify indirect and direct costs, with grantees maintaining allocation records for at least 10 years after final payment or closeout.

Applies to grants awarded or renewed on or after July 1, 2025, with existing multi-year grants subject to the cap upon their next renewal or amendment.