Auditor briefs council on budget cycle, grants administration and proposed switch to federal de minimis indirect rate

San Juan County Auditor Natasha Warmanhoven presented a multi‑topic briefing to the council, covering budget schedules, grants administration, the county—s 2023 audit results, a proposed change to the county—s indirect cost methodology for grants, and several operational changes the auditor enacted in 2024.

Warmanhoven described the 2025 budget and mid‑biennium amendment calendar, advised against adding new permanent positions via out‑of‑cycle amendments (recommending such requests be addressed in the biennial budget), and noted San Juan County code requires operating cash equal to at least 10% of county current expenditures. She introduced Molly Foote as the county—s budget analyst and said the auditor—s office will continue quarterly financial reviews and provide training materials and recordings for council and staff.

On grants and indirect costs, Warmanhoven and Tara Anderson (grants administrator) said San Juan County administered roughly $6 million a year in federal and state pass‑through awards (2023 audited figures) but only recovered about $115,000 in indirect costs under the county—s current methodology, which applies a 23.5% rate on wages only. The auditor recommended certifying the federally permitted de minimis indirect rate of 15% (applied to modified total direct costs) for at least two years while the county evaluates a full indirect rate negotiation or update; the de minimis rate was raised to 15% in October 2024. Council members and the county manager voiced support for moving to the de minimis standard while the auditor pursues a longer‑term solution.

Warmanhoven announced her office would no longer provide non‑mandated financial services to junior taxing districts effective January 1, 2025. She said the change followed a review of liability, staff capacity and inconsistent interlocal arrangements. The auditor said the office had provided six months’ notice, circulated resources and hosted Q&A sessions for affected districts; council members asked the auditor—s office to continue transition support and to keep communication open with districts that may lack staffing capacity.

The auditor also summarized the county—s 2023 external audit results: an unmodified financial opinion overall, but two findings related to (1) reporting of sales/purchases of investments tied to junior taxing district funds and (2) federal suspension/debarment checks (some vendor checks occurred outside the required timing window). Warmanhoven said corrective actions are in progress.

On enterprise resource planning, the auditor confirmed the county will migrate from Eden to Tyler Technologies— Enterprise ERP; the financial module and chart of accounts are priority items and a project re‑kickoff was planned for April 2025.

Why it matters: Grants and the county—s indirect costs affect the county—s ability to recover administrative expenses and to sustain programs. The auditor—s move to standardize the indirect‑cost approach and to remove unsustainable services to junior taxing districts aims to reduce liability and clarify county responsibilities.

Speakers: [{"name":"Natasha Warmanhoven","role_title":"County Auditor","affiliation_type":"government","affiliation_name":"San Juan County"},{"name":"Molly Foote","role_title":"Budget Analyst","affiliation_type":"government","affiliation_name":"San Juan County"},{"name":"Tara Anderson","role_title":"Grants Administrator","affiliation_type":"government","affiliation_name":"San Juan County"},{"name":"Brendan Hudson","role_title":"County Manager","affiliation_type":"government","affiliation_name":"San Juan County"}],

authorities:[{"type":"statute","name":"Revised Code of Washington (RCW) budgeting and auditing provisions","citation":"RCW (various budget and audit provisions referenced)","referenced_by":["auditor-office-budget-grants-and-indirect-rate"]},{"type":"other","name":"Uniform Guidance (federal) for federal awards","citation":"Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards","referenced_by":["auditor-office-budget-grants-and-indirect-rate"]}],

actions: [],

discussion_decision:{"discussion_points":["Mid‑biennium budget amendment process and schedule","Recommendation to avoid adding permanent positions via mid‑cycle amendments","Current indirect rate methodology recovered roughly $115,000 on $6M of grants (23.5% on wages) and is time consuming to prepare","Proposal to adopt federal 15% de minimis indirect rate for new federal contracts while evaluating long‑term plan","Ending non‑mandated financial services to junior taxing districts effective Jan 1, 2025"],"directions":["Auditor will pursue adoption of the federal de minimis (15%) indirect rate for new federal contracts and evaluate options for a negotiated plan","Auditor to continue transition assistance and outreach to junior taxing districts during 2025"],"decisions":[]},

clarifying_details:[{"category":"indirect_rate_2023","detail":"Indirect rate used for 2023 calculations (wages base)","value":23.5,"units":"percent","approximate":false,"source_speaker":"Natasha Warmanhoven"},{"category":"indirect_recovery_2023","detail":"Total indirect dollars collected in 2023","value":115000,"units":"USD","approximate":true,"source_speaker":"Natasha Warmanhoven"},{"category":"de_minimis_change","detail":"Federal de minimis rate increase in Oct 2024","value":15,"units":"percent","approximate":false,"source_speaker":"Natasha Warmanhoven"}],

proper_names:[{"name":"San Juan County Auditor's Office","type":"agency"},{"name":"Tyler Technologies Enterprise ERP","type":"other"},{"name":"Uniform Guidance","type":"statute"}],

community_relevance:{"geographies":["San Juan County"],"funding_sources":["federal grants","state grants"],"impact_groups":["nonprofits","junior taxing districts","county departments"]},

meeting_context:{"engagement_level":{"speakers_count":4,"duration_minutes":60,"items_count":1},"implementation_risk":"medium","history":[{"date":"2023-01-01","note":"Previous indirect rate calculations and audit references"}]},

searchable_tags:["auditor","budget","indirect_rate","grants","junior_taxing_districts","ERP_migration"],

provenance:{"transcript_segments":[]},

salience:{"overall":0.89,"overall_justification":"Auditor actions affect county finances, grant recovery and legal compliance; the proposed switch to a federal de minimis rate changes how administrative costs are recovered and affects county general fund exposure.","impact_scope":"local","impact_scope_justification":"Countywide fiscal processes and grants administration.","attention_level":"high","attention_level_justification":"Adopting an indirect rate affects grant budgeting and costs and affects junior taxing districts' handling of funds.","novelty":0.45,"novelty_justification":"Proposal to adopt federal de minimis rate after years of a county‑developed methodology is a practical change though not unprecedented.","timeliness_urgency":0.72,"timeliness_urgency_justification":"Auditor recommended adopting the de minimis rate immediately for new contracts while conducting a longer review.","legal_significance":0.70,"legal_significance_justification":"Audit findings require corrective action and the auditor cited RCW/uniform guidance obligations.","budgetary_significance":0.60,"budgetary_significance_justification":"Indirectcost recovery affects county current expense fund and grant administration capacity.","public_safety_risk":0.05,"public_safety_risk_justification":"Low direct public safety implications.","environmental_impact":0.00,"environmental_impact_justification":"Not applicable.","affected_population_estimate":100,"affected_population_estimate_justification":"Number of county departments and nonprofit partners directly affected by grants policy.","affected_population_confidence":0.60,"affected_population_confidence_justification":"Estimate based on departments interacting with grants management.","budget_total_usd":115000,"budget_total_usd_justification":"Approximate indirect dollars collected in 2023 under prior methodology.","decision_deadline":"2025-04-01","decision_deadline_justification":"Auditor recommended adopting a temporary de minimis rate for new federal awards and evaluating long‑term changes.","policy_stage":"implementation","policy_stage_justification":"Auditor recommended an immediate administratively feasible change (de minimis) while pursuing a longer review.","follow_up_priority":10,"follow_up_priority_justification":"Direct impact on county finances and constitutional compliance.","fact_check_risk":0.10,"fact_check_risk_justification":"Financial numbers were provided by county auditor in meeting.","uncertainty":0.30,"uncertainty_justification":"Final policy on indirect rate and long‑term plan depends on further analysis and possible consultant work.","source_diversity":0.40,"source_diversity_justification":"Briefing relied primarily on auditor—s office and grants manager; external audit firms also referenced.","stakeholder_balance":0.50,"stakeholder_balance_justification":"Council, auditor, county manager, and nonprofit/grantee interests intersect.","alert_flags":["large_budget","missing_sources"],"alert_flags_justification":"Indirect rate affects large grant portfolios and requires updated documentation."}},{