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Audit shows Iowa Governor Kim Reynolds mis-spent millions in Coronavirus Relief Funds

This news story was published on October 20, 2020.
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Iowa Governor Kim Reynolds

DES MOINES – An audit shows Iowa Governor Kim Reynolds mis-spent millions in Coronavirus Relief Funds.

Iowa Auditor Rob Sand explicitly said, “this misuse of CARES Act Funds is not a criminal offense.” His office released the following information on the matter:

As a part of our obligation to audit the Iowa Governor’s Office and the Iowa Department of Management, our Office has reviewed two of the Governor’s decisions regarding the spending of Coronavirus Relief Fund (CRF) dollars. The CARES Act, which created and funded the CRF, gives states until the end of calendar year 2020 to spend their allotted funds, or the funds will be reclaimed. In addition, spending that does not comply with the CARES Act use restrictions, if not corrected by the end of the calendar year, will have to be repaid to the federal government. Any such repayments will result in a net loss to Iowa taxpayers. The CARES Act provides that payments from the Fund may only be used to cover costs that:

1. are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID–19);

2. were not accounted for in the budget most recently approved as of March 27, 2020 (the date of enactment of the CARES Act) for the State or government; and

3. were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020.

We are providing this guidance now to ensure the Governor has an opportunity to correct identified spending that does not comply or may not comply with use restrictions. We have also consulted with The United States Treasury Office of the Inspector General to confirm our conclusions.

Workday Funding

The Governor has chosen to spend $21 million on Workday, an HR/accounting computer system intended to replace the State’s legacy mainframe system. The State contracted with Workday in 2019, which put in place at that time a regular payment schedule. The CRF dollars would be used to meet those regular payments contemplated in the 2019 contract. To justify the expenditure, the Governor’s Office stated “with Workday, the State of Iowa will be able to act quickly to assist essential government employees, giving them flexibility in a number of ways, such as requesting COVID-related hardship help, easier ways to request Family and Medical Leave Act leave types, and automate processes for donating leave, and borrowing leave.”

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. The statement regarding how Workday affects state employees, a portion of whom are themselves working on the public health emergency, is essentially a restatement of the purpose of Workday in general, which did not change with the emergence of COVID- 19.

That this expenditure does not meet the first requirement means that there is no need to address whether it meets the other two requirements. 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.

Governor’s Staff Salaries

We have also reviewed Governor’s decision to spend $448,449.00 of CRF dollars on salaries for the Governor’s staff. General defenses of this decision have centered on the idea that CRF dollars can be used for salaries. That is not entirely accurate. Official guidance states “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” is eligible, but “payroll or benefits expenses for employees whose work duties are not substantially dedicated to mitigating or responding to the COVID-19 public health emergency” is not eligible. More specifically, indirect costs cannot be covered. A featured example of coverable costs “includes, but is not limited to, costs related to disbursing payments from the Fund and managing new grant programs established using payments from the Fund.”

Salaries may qualify only when certain conditions are met. The work the Governor’s staff are doing that is directly related to the pandemic must be tracked separately from their ordinary work, and supported with appropriate documentation. Only then may that portion of their salaries qualify, and not if the work is only indirectly related to the pandemic.

Most importantly, whether those conditions are met will only be judged in hindsight, upon an audit of the timekeeping records and supporting documentation. That means an inadequate focus on pandemic by those employees, or an indirect focus, and/or an inadequate record-keeping effort, could result in those funds also having to be repaid to the federal government. That would result in a loss for Iowa taxpayers.

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.

The Small Business Relief Grant Fund is one example of an appropriate re- deployment; purchasing PPE for essential workers, expanding testing and/or contact tracing efforts, and increasing staffing at the State Hygienic Lab to process COVID-19 tests more are others to consider as ways to redeploy the $448,449.00 prior to the close of the calendar year.

Please contact us with any questions. As I have written consistently since March, this Office stands ready to assist on the pandemic response if you have any need.


Rob Sand
Auditor of the State of Iowa

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12 Responses to Audit shows Iowa Governor Kim Reynolds mis-spent millions in Coronavirus Relief Funds

  1. Anonymous Reply Report comment

    October 24, 2020 at 9:29 am

    The difference between Trump and Biden, the Republicans and the Democrats is as clear as light and darkness. Trump is the light.. Vote Trump!!!

  2. Guvna Reply Report comment

    October 22, 2020 at 10:42 am

    At least none of the money went to illegal immigrants! Pelosi’s border bouncers.

    • Anonymous Reply Report comment

      October 22, 2020 at 10:52 am

      At least none of the money went to Russian hookers! Trump’s golden shower girls.

  3. Boris Reply Report comment

    October 21, 2020 at 2:09 am

    Call in the revenue men and throw the cuffs on these flunkies. Round up the cohorts too. It’s deception fueled by greed. Ethically weak. Probably drunk. Won’t matter anyways. The whole world will catch the covid and move on as our bodies adapted over time. It reoccurs after the initial exposure. It assaults the very complicated heart muscle. The lungs are but an extension of the heart and should be viewed as one. Not two as some Dummies would have you believe. Once into the heart it will drop down into the reproductive slime, eggs and sperm. Covid babies will be born with heart problems. Until we adapted. So any frozen sperm/eggs will be no good in a covid infected world of the future. Think what 21 million could do for what it was intended for. Figure out what this is for a start. Or the paddy wagon coming.

  4. Anonymous Reply Report comment

    October 20, 2020 at 5:08 pm

    Another trump puppet gets caught! Not surprised at all! Let’s vote her out too when her time is up!!!

    • Anonymous Reply Report comment

      October 20, 2020 at 6:56 pm

      Why? We could have it much worse like having that dullard running the show in Minnesota. Rumor has it, it didn’t snow today in the Twin Cities, that was just the ashes of all the small businesses that have been destroyed under his ‘leadership’.

      • Anonymous Reply Report comment

        October 20, 2020 at 9:58 pm

        or the Trump’s.

      • Anonymous Reply Report comment

        October 21, 2020 at 12:59 pm

        yeh you bet. When those businesses come back you will give credit not to him but to trump who will by that time be out of office.

        • Anonymous Reply Report comment

          October 21, 2020 at 5:34 pm

          I’ll give credit to whichever politician makes it easier to hold media outlets criminally and financially responsible for yellow journalism and their activism disguised as journalism.

          • Anonymous

            October 21, 2020 at 6:12 pm

            Fox News will be soon out of business then.

          • Anonymous

            October 21, 2020 at 8:59 pm

            Its not just Fox News. CNN is THE worst. Washington Post, New York Times, MSNBS, Huff Post. All activists with no shred of journalism to offer.

          • Anonymous

            October 22, 2020 at 9:41 am

            You forgot Breibart, Drudge. OAN and all the rest. Do you think any news site is completely unbiased? They all lean one way or the other. It is up to the viewer or reader to look for the truth.