Shasta County Auditor-Controller Nolda Short is warning that a proposed ordinance setting a blanket 18% cap on indirect cost recovery could conflict with federal grant rules.
In a written response titled “Auditor-Controller Response,” Short says federally funded pass-through contracts are governed by Uniform Guidance, or 2 CFR Part 200, and that nonprofits with a federally negotiated indirect cost rate are generally entitled to recover costs at that approved rate. She also says eligible organizations without a negotiated rate may use the federal de minimis rate.
Short warns that a countywide cap could force the county to ignore federally approved rates, create inconsistent contracting practices across funding sources and lead to audit findings, corrective action requirements, disallowed costs, repayment obligations and increased scrutiny from grantor agencies.
She says the county can still pursue cost control, but suggests distinguishing between federal pass-through contracts and other contracts funded by state or local dollars. Short also recommends review by County Counsel, HHSA and the Auditor-Controller’s Office before adopting any ordinance with a blanket cap.
The excerpt does not show whether the ordinance was introduced, amended, tabled or adopted after the warning.
