Iowa officials declare Gov. Reynolds’ use of $21M pandemic relief funds “not allowable”

Iowa Gov. Kim Reynolds
Iowa Gov. Kim Reynolds
Published: Oct. 19, 2020 at 2:52 PM CDT
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DES MOINES, Iowa. (WOWT) - Iowa Gov. Kim Reynolds' use of $21 million in CARES Act funds was determined to be “not allowable” by state officials, according to a release from the State Auditor’s Office on Monday.

State Auditor Rob Sand and the Treasury Department’s Inspector General advised Reynolds her decision to use the funds for a new software system for the state was not allowed.

Reynolds was directed to return the money to the Coronavirus Relief Fund and “redeploy them for allowable uses.”

Sand, according to the statement, advised Reynolds using CARES Act monies for “her personal staff was questionable” and could lead to repayments being needed if enough work was not done towards the pandemic’s effects.

“...(Sand) encouraged her to redeploy those dollars to uses that were automatically qualified, such as purchases of PPE, increasing testing capacity or other direct pandemic-mitigation purposes,” the statement reads.

The release included correspondence between the auditor’s office and the department of management, which included the following findings:

Two decisions by the governor’s office regarding how funds were spent did not adhere to restrictions and if not corrected by the end of 2020 will have to be repaid to the federal government.

Such a repayment would result in a net loss to Iowa taxpayers.

Reynolds spent $21 million on Workday, a human resources and accounting computer system which was designed to replace the state’s previous system.

Workday was contracted by the state in 2019 and put on a payment schedule. The governor’s office justified the spending by claiming it would assist state employees by, among other factors, give them flexibility for requesting COVID-related hardship help."

However, the auditor’s office found the expenditures were not “due to the public health emergency.” As the state’s contract with Workday was signed in 2019 prior to the emergence of the COVID-19 pandemic, the funds did not meet the first requirement for such use, let alone the other two requirements.

“If the Governor does not redeploy these dollars to a lawful use, they will have to be repaid to the federal government,” the correspondence reads.

Also included was a review of $449,449 Reynolds spent on salaries for her staff. “General defenses of this decision have centered on the idea that CRF dollars can be used for salaries,” the auditor’s office stated. “That is not entirely accurate.”

An example of how funds were not to be used included paying for new grant programs.

If the work is directly related to the pandemic, it must be tracked separately from “ordinary work, and supported with appropriate documentation.”

“There are many direct pandemic relief methods to spend CRF dollars that do not risk a net loss to Iowa taxpayers upon audit, and that more directly help Iowa address the pandemic,” the correspondence states.

Another example given was the Small Business Relief Grant Fund is an appropriate redeployment of the monies by purchasing PPE for essential workers, expanding testing and contact tracing, among other uses.

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