Audit faults Iowa’s move to spend virus aid on $21M software

IOWA CITY, Iowa (AP) — Iowa’s auditor warned Monday 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.

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. He said that 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.

Sand, a Democrat, said his conclusion was shared by the Treasury Department’s Office of Inspector General, which is responsible for overseeing the appropriate use of federal funds.

He noted that the administration of Republican Gov. Kim Reynolds signed a five-year, $20 million software contract with Workday in 2019, long before the coronavirus pandemic started. In addition, the state anticipates spending around $28 million more on implementation costs.

Earlier this year, Reynolds’ office decided to partly pay for the program with money from the $2.2 trillion coronavirus aid package approved in March by Congress, which has sent billions of dollars to Iowa.

Reynolds’ office has sought to justify its decision to pay for Workday with the money by arguing that it would allow the state to “act quickly to assist essential government employees.” The program could help workers request COVID-19 hardship assistance and time off for family and medical leaves, for instance.

Sand said that his review found that Iowa’s spending would not qualify under federal rules because the expenses were not incurred “due to the public health emergency” as required. He said the purpose of the program — to modernize the state’s human resources and accounting technology — did not change once the coronavirus emerged.

A spokesman for the governor didn’t immediately return an email seeking comment.

Democratic lawmakers said they were blindsided last year by the state’s decision to skip a traditional bidding process and contract with Workday, which has already been used by the Iowa Department of Transportation and Iowa State University. Reynolds has said that her former chief of staff, a lobbyist for Workday, “had nothing to do” with the state’s decision, which she says was part of a necessary upgrade of outdated information technology infrastructure.

Also on Monday, Sand said the governor’s decision to spend $448,449 in pandemic relief funds on staff salaries “was questionable” and he encouraged her to halt the practice.

Sand said employees’ salaries may qualify for the funds only if the work they are doing is directly related to the pandemic, tracked separately from their ordinary work and supported by documentation.

An inadequate focus on the pandemic by those employees or poor record-keeping could lead to Iowa taxpayers having to repay the money, he warned.

Given that risk, Sand recommended that Iowa use those funds for other purposes, such as giving aid to small businesses, purchasing personal protective equipment and expanding coronavirus testing and contact tracing.