Iowa auditor says governor wrong to spend $21M in federal pandemic relief on software system

The office of Iowa Governor Kim Reynolds (R) misused millions of dollars in federal coronavirus relief funding, according state Auditor Rob Sand.

In a letter on Friday, Sand pointed to two areas in particular where the governor spent money which he said did not meet the requirements to qualify: Namely, the expense had to be incurred due to the public health emergency caused by the coronavirus pandemic, it had to occur in the time between March 1 and Dec. 30 and it was not accounted for in the budget when the CARES Act was enacted on March 27.

The first expenditure Sand points to is $21 million spent on the HR/accounting computer system Workday. Iowa had contracted the company in 2019, which Sand said means Coronavirus Relief Fund (CRF) could not be used to pay for it and the money would have to come from the regular budget.

Reynolds’s office reasoned that the software system would allow the state to “quickly to assist essential government employees, giving them flexibility in a number of ways.”

“These expenditures are not ‘due to the public health emergency.’ The State signed a contract in 2019 for these expenditures prior to the emergence of COVID-19,” Sand said in his letter. “Spending $21M on Workday is not an appropriate use of CRF funds. If the Governor does not redeploy these dollars to a lawful use, they will have to be repaid to the federal government. That will result in a $21M loss for Iowa taxpayers.”

The Hill has reached out to Reynolds’s office for comment.

She also allegedly used $448,449 from the CRF to pay the salaries of her staff members. The governor argued that the funds were designated to pay salaries, but Sand pointed to official guidance that stated the money can be used for “payroll expenses for public safety, public health, health care, human services, and similar employees whose services are substantially dedicated to mitigating or responding to the COVID19 public health emergency.”

Sand argues that the work of the governor’s staff, though it may involve COVID-19 mitigation and relief, was not substantially dedicated to such endeavors.

Sand ends his letter by recommending several ways in which federal money could be spent properly, including the Small Business Relief Grant Fund, purchasing personal protective equipment and improving testing conditions.

He writes, “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. Given that risk, and the more directly beneficial alternatives that do not pose a risk, this Office recommends re-deploying those funds.”