During the March 12, 2025, Governor and Council meeting, I raised a critical issue about indirect costs in federal grants, particularly those managed by the Department of Health and Human Services (DHHS). This issue affects how taxpayer dollars are spent, and I want to share my concerns and actions with you.

I questioned a contract (Item #15) involving a vendor, JSI, with an indirect cost rate exceeding 20%. When I was DHHS Commissioner, I maintained a 10% threshold for indirect costs—a reasonable limit that ensures funds prioritize direct services over overhead expenses like administrative salaries or office space. Rates above this threshold, in my view, shortchange our communities.

The DHHS financial representative claimed this 20%+ rate was mandated by federal regulations, citing the Federal Uniform Guidance updated on October 20, 2024. They stated that the Negotiated Indirect Cost Rate Agreement (NICRA) sets the rate for nonprofit indirect costs, and states must accept it without negotiation (per 2 CFR 200.414 and 332). The Office of Management and Budget reportedly set this standard.

I struggle to believe the federal government can dictate exact indirect cost rates to New Hampshire for any vendor, nonprofit or for-profit. This policy, issued under a previous administration, prompts questions: Does it apply to all federal grants or specific programs? Are Workforce Investment Opportunity Act funds or highway funds subject to the same rules? Can New Hampshire, committed to fiscal responsibility, opt out to focus on direct services?

To address these concerns, I sent a letter to Attorney General John Formella on March 13, 2025, requesting clarification on these federal mandates, their scope, and whether New Hampshire has flexibility to prioritize taxpayer value. My goal is to ensure our state maximizes every federal dollar for the services our residents need most.

I’ll keep you updated on the Attorney General’s response and my ongoing efforts to protect New Hampshire taxpayers. Together, we can ensure government spending reflects our values of efficiency and accountability.