State Auditor: Gov. Reynolds misused $21M in pandemic relief funds

Iowa News

DES MOINES, Iowa (WHO) – Gov. Kim Reynolds misused $21 million in pandemic relief funds to implement a new software system for the state government, according to a report from the state auditor.

State Auditor Rob Sand said the governor directed $21 million of CARES Act funding to implement Workday, an HR/accounting computer system intended to replace the state’s old system. This is not an allowable use of the funds, according to Sand.

Sand said CARES Act funding must be used to pay for costs that were:

  1. Necessary expenditures incurred due to the COVID-19 public health emergency
  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.

Sand said the governor’s decision to use the funds on Workday was not due to the public health emergency. The state signed a contract in 2019 with the company, prior to the emergence of COVID-19.

Additionally, Reynolds’ former chief of staff, Jake Ketzner, is a lobbyist for Workday. Sand said there is “no question” that the state’s legacy software system needed to be replaced, and that there are only a handful of systems available.

“There is a potential conflict of interest there with her former chief of staff working at Workday,” Sand said in an interview with WHO 13 News. “The fact that he was working there is something that might be problematic, but it doesn’t change the fact that we needed to have a new system.”

Still, Sand said the justification for using CARES dollars toward Workday in the middle of a public health crisis is not sound.

To justify the spending, Sand said 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.”

Refuting this justification, Sand said, “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.”

Sand said his office also consulted with the United States Treasury Office of the Inspector General to confirm their conclusions.

The report also noted the governor’s use of coronavirus relief funds for personal staff was “questionable.” 

“At the end of the day, my question is what’s the work that has to be done and what are the new employees that have to be added to make sure the pandemic is mitigated,” Sand said. “That’s those salaries that without question [this money] can be used to compensate.”

He said while federal dollars may be used toward staff salaries, Reynolds will have to prove her staff took on new roles to help mitigate the pandemic, which required more pay.

The funds will have to be repaid to the federal government if the improper spending is not corrected by the end of the calendar year.

“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,” Sand said.

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