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

SF 2386 sets a 5% cap on administrative costs (indirect costs) charged to state-funded grants in Iowa, effective July 1, 2026. It applies to all state departments awarding grants and grant recipients, including nonprofits, schools, and local governments. The bill requires grants to separately list direct and indirect costs in budgets, mandates documentation for all indirect cost calculations, and prohibits reclassifying indirect costs as direct costs to bypass the cap. Departments must enforce the limit during grant approval and monitoring, and disallowed costs must be recovered.