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Audit finds Gov. Reynolds’ use of $21M in CARES Act money ‘not allowable’

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This story has been updated, click here for the latest updates.

DES MOINES, Iowa (KWWL) -- Iowa’s auditor is warning that the governor’s decision to spend $21 million in federal pandemic relief funds on a new executive branch software system would not be allowed and should be abandoned. 

In a news release, Monday, State Auditor Rob Sand said that using the federal money to pay for Workday, a cloud-based program for the executive branch’s human resources and finances, is an inappropriate use under the law.

In a letter sent to the director of the Iowa Department of Management, Sand advised that the millions of dollars used for the system was not allowed under CARES Act expenditure requirements.

According to the letter, CARES Act provides that payments from the Fund may only be used to cover costs that:

  • Are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19).
  • Were not accounted for in the budget most recently approved as of Marcy, 2020 (the date of enactment of the CARES Act) for the state or government.
  • Were incurred during the priod that begins on March 1, 2020 and ends on Dec. 30, 2020.

According to Sand, if the money isn’t redeployed for a different purpose, Iowa taxpayers could be on the hook to repay the federal government $21 million later on.

As of this publishing, our sister station KWWL is awaiting comment from the Governor's office. In the letter, Sand stated that the Governor's Office justified the expenditure by saying the following:

“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.”

Sand also noted a review of the governor's decision to spend $448,449 of relief funds to pay staff salaries. While that act was not found to be a violation, Sand elaborated that the requirements for such payroll expenditures would only be for work done as it related to mitigating and responding to the COVID-19 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," said Sand.

The letter advised the governor's office to redeploy these funds to those that are "automatically" qualified.

Sand said his conclusions were shared by the Treasury Department’s Office of Inspector General, which is responsible for overseeing the appropriate use of those funds.

View the full release and letter here:

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