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Iowa Governor To Return $21 Million Of CARES Funding She Directed To Software Project

Iowa Capitol with snow
Michael Leland
Iowa Gov. Kim Reynolds is returning $21 million of federal coronavirus relief funding that she initially allocated for a new human resources software system.

Iowa Gov. Kim Reynolds announced Monday she is returning $21 million of federal coronavirus relief funding that she initially allocated for a new human resources software system, after the U.S. Treasury Office of the Inspector General affirmed its earlier finding that it was not an allowable use of CARES Act money.

According to a news release, that money will be returned to Iowa’s Coronavirus Relief Fund by the end of the week. That will leave a total of $47.3 million left to be allocated by the Dec. 30 deadline.

“The COVID-19 pandemic only further highlighted the critical need for integrated IT systems that will improve operational efficiency and effectiveness for the State of Iowa,” Reynolds, a Republican, said in a statement. “Following multiple conversations with the Treasury Department last spring, we believed we had assurances that the upgrade to Workday qualified as an allowable expense. We would not have moved forward without those assurances.”

The federal government sent $1.25 billion to Iowa last spring under the CARES Act, which Reynolds has spent on small business and agriculture relief, assistance for health care providers, unemployment benefits, eviction prevention funding, and more.

She also allocated $21 million for Workday, a new cloud-based human resources and accounting system for the state. The state contracted with Workday in 2019 and established a five-year payment schedule.

In October, Iowa State Auditor Rob Sand notified Reynolds’ office that this did not meet the CARES Act requirement that funds be spent on “necessary expenditures incurred due to the public health emergency.” The U.S. Treasury OIG had confirmed Sand’s conclusion, but Reynolds previously disputed the findings.

“It’s a shame that during the middle of a global pandemic there was even the thought to spend $21 million on a fancy new software system and not on saving small businesses or increasing our testing capacity,” Sand, a Democrat, said in a statement Monday. “Iowans can rest assured that our office will continue to work on our own and potentially in conjunction with other federal agencies to ensure that every dollar of CARES Act money is properly accounted for.”

A news release from Reynolds’ office says $4.45 million of the $21 million was spent on Workday, and that implementation of the system will continue on schedule. Iowa lawmakers will have to approve state funding to complete the project when the 2021 legislative session begins Jan. 11.

Sand also told Reynolds’ office in October that her use of $448,449 of CARES Act funding to help pay 21 of her existing staff members was questionable.

According to Reynolds’ spokesperson, the U.S. Treasury OIG has not made a determination on that use of funding.