The state auditor and federal inspectors have determined Gov. Kim Reynolds’ decision to use $20 million of coronavirus relief money on a new computer system was “not allowable” and could result in Iowa losing the money if it’s not shifted by the end of the year.
“If the Governor does not redeploy these dollars to a lawful use, they will have to be repaid to the federal government,” State Auditor Rob Sand wrote in an Oct. 16 letter to Dave Roederer at the Department of Management. “That will result in a $21M loss for Iowa taxpayers.”
In July, Reynolds announced she had transferred $91 million of Iowa’s $1.25 billion from the Coronavirus Aid, Relief and Economic Security, or CARES Act, to the Office of the Chief Information Officer for technology upgrades.
Included in this was $20.1 million to replace the state’s budget, accounting and human resources computer system with a cloud-computing system by Workday, The Gazette reported in August.
Reynolds’s Spokesman Pat Garrett told The Gazette in August the Workday system will play an “integral role” in the response to COVID-19 by giving government employees flexibility and aiding with budgeting and remote work. The system was scheduled to be implemented starting in 2021.
Richard Delmar, deputy Inspector General for the U.S. Department of the Treasury, also wrote a letter to Roederer Oct. 16, echoing Sand’s findings.
“While the new and modern Workday system may provide additional functionality, these upgrades are not necessary to address the public health emergency and were already planned before the COVID-19 pandemic outbreak,” Delmar wrote. “As such, funding the Workday contract with Coronavirus Relief Fund proceeds is not a reasonable,
allowable use of funds.”
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He asked Roederer to reply by Oct. 26 with Iowa’s corrective action plan for returning that money to Iowa’s Coronavirus Relief Fund.
The state signed contracts in October and February to pay Workday $50 million over five years for the new system, skipping traditional competitive bidding procedures and choosing a company whose lobbyist, Jake Ketzner, was Reynolds’ former chief of staff, The Gazette reported in February.
When The Gazette detailed the unusual route the state took to arrive at a contract with Workday, the governor’s office said Ketzner was not involved.
Reynolds initially planned to fund the annual payment to Workday with money from the Rebuild Iowa Infrastructure Fund, Sen. Joe Bolkcom, ranking Democrat on the Iowa Senate Appropriations Committee, told The Gazette in August.
But since that fund is fed by gaming revenue from Iowa’s state-licensed casinos, which were closed for 11 weeks because of COVID-19, there wasn’t enough money for the Workday expenditure.
The Workday system was not scheduled to be implemented until July 2021 and July 2022.
CARES Act funds are supposed to be used to “cover costs that are necessary expenditures incurred due to the COVID-19 public health emergency that were not previously accounted for in the budget most recently approved as of March 27,” the nonpartisan Legislative Services Agency reported in August.
Sen. Claire Celsi, D-Des Moines, said in a statement Monday she was disappointed Iowa didn’t follow the CARES Act rules.
“Instead of directing more money to testing and contact tracing, paid sick leave for essential workers, food assistance, child-care subsidies, additional money for rent assistance, unemployment insurance, utility assistance, providing PPE to health care workers and educators, and to help schools prepare for the winter season — and myriad of other uses — Governor Reynolds is using the CARES Act money as a means to fund pet projects and make Iowa’s budget appear flush with excess funds,” Celsi said.
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