Kim Reynolds Misspent COVID Funds, Rob Sand's Audit Finds

By Pat Rynard

October 19, 2020

Gov. Kim Reynolds directed CARES Act money meant for COVID-19 management to a HR company that her former chief of staff lobbies for, to set up a new HR software system for state government, a new audit from State Auditor Rob Sand shows. Approximately $21 million from the federal government meant for the pandemic was spent on Workday, a system that the state already contracted with in 2019.

The U.S. Treasury Office and Inspector General were also involved in the audit, confirming Sand’s findings.

Sand also found concern with Reynolds’ use of CARES Act money to pay some of her office staffs’ salaries, which he stated were “questionable and could lead to repayments” if the staff did not do enough COVID-related work or it wasn’t well-documented.

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“These expenditures are not ‘due to the public health emergency,'” Sand wrote in a letter of the Workday expenses. “The State signed a contract in 2019 for these expenditures prior to the emergence of COVID-19.”

Reynolds’ office justified the expense, according to Sand’s letter, by saying it would help state employees better request medical-related paid leave. However, Sand noted that those features were already part of the original justification for the Workday system in 2019, not a new rationale related to the pandemic.

Under the CARES Act law, any funding from the federal government through the program must be “necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019.”

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“Spending $21M on Workday is not an appropriate use of CRF funds,” Sand wrote. “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 also looked at Reynolds’ defense of using a little under half a million dollars in CARE Act funds for her own staff, a situation brought to light from Bleeding Heartland earlier this year. The Governor has said that staff salaries are an acceptable use of CARES Act dollars.

“That is not entirely accurate,” Sand wrote. “…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.”

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The way Reynolds used the money put Iowa at risk for having to repay it and losing out on the federal assistance, Sand noted. He suggested other, far safer and effective ways to use the funding to help Iowans survive the pandemic, like purchasing more PPE, expanding tracing efforts or adding staff to the State Hygienic Lab.

You can read the full report here.

by Pat Rynard
Posted 10/19/20

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Pat Rynard

Pat Rynard founded Iowa Starting Line in 2015. He is now Courier Newsroom's National Political Editor, where he oversees political reporters across the country. He still keeps a close eye on Iowa politics, his dog's name is Frank, and football season is his favorite time of year.

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