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

HF 2304 sets a statewide 5% cap on indirect costs (administrative expenses like office space or general management) charged to state-funded grants, effective July 1, 2026. It directly affects grantees - including nonprofits, local governments, schools, and for-profit organizations - and state departments managing grants by requiring separate budgeting of direct and indirect costs, prohibiting cost reclassification to bypass the cap, and mandating documentation for audits. The bill requires grant budgets to detail indirect cost calculations and retain records for ten years, with departments enforcing compliance through pre-award reviews and payment controls. Grantees must also adjust allocations if indirect costs exceed the limit, with disallowed costs recoverable through future payments or repayment.