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Harris County staff propose 5% overhead on grants and special funds; commissioners ask for precinct-accounting clarity
Summary
OMB presented a new overhead policy to charge a 5% administrative rate on special funds and a 5% overhead on grants (with exemptions), estimating about $17M backdated this year and $15M annually once fully implemented; commissioners sought details on allocation back to precincts and exemption procedures.
OMB staff presented two related policy proposals to the Commissioners Court on Sept. 10: (1) a standard overhead charge to reimburse the general fund for administrative services used by special funds, and (2) a 5% grant overhead rate to cover county administrative costs.
Director Ramos said the county currently has no countywide overhead policy and recommended a 5% rate to bring Harris County closer to peer jurisdictions. "We want to charge a standard overhead rate of 5%," Ramos said, adding that the federal average is around 10% and that capital funds, CDBG and small grants would be exempted.
Why it matters: Ramos said backdating the overhead rate for one large fund would generate about $17,000,000 this year and that, once fully implemented, grant overhead would likely yield about $15,000,000 annually. The policy is meant to reduce subsidization of grant work by the general fund and to allow departments to budget administrative costs.
Commissioners’ concerns: Several commissioners supported the concept but pressed for clarity on how overhead dollars would be returned or credited to the precincts and departments that prepared grant applications. Commissioner Ramsey noted that precincts with dedicated grant staff need assurance some portion returns to the units that generated the grants; Ramos and staff said they would meet with precinct offices and consider language or amendments to ensure appropriate allocation or exemptions.
Implementation and exemptions: Ramos described an exemption process for grants that disallow overhead; departments can apply for case‑by‑case exceptions and the court retains final oversight. The policy will return for formal adoption at the Sept. 19 hearing as part of the budget process.
What to watch: Commissioners asked OMB to draft clearer language on how overhead proceeds will be allocated and whether a portion can be credited back to precincts that create grant revenues, and to include the exemption procedures in the policy draft returned for adoption.
