DES MOINES, Iowa (AP) — A state audit report on government spending released Monday accused Iowa Gov. Kim Reynolds claimed to have used nearly $450,000 in federal coronavirus relief funds last year to pay the salaries of 21 staff members for three months and to hide the expenses by passing it through the State Department of Homeland Security and Emergency Management.
State auditor Rob Sand said a review of the state’s payroll system shows the money was used to pay the Republican governor’s office workers, but it’s unclear why she had to take federal money to pay the salaries.
“What’s not clear is why these salaries were not included in the governor’s budget set ahead of the fiscal year and pre-pandemic,” he said in the audit report. “Based on this information, we conclude that the budget deficit was not the result of the pandemic.”
Sand said he had twice asked Reynolds’s office for documentation to support spending and was told that in March, April, May and June 2020, the governor’s staff was completely focused on responding to COVID-19 and the protecting Iowa, but had never provided evidence of spending on the COVID response.
He wrote to Reynolds’ office in October telling her that paying staff salaries without proper documentation probably wouldn’t get federal approval, but said they were ignoring his suggestion.
Sand said he requested information from the Department of Homeland Security and Emergency Management and was initially given a spreadsheet with the governor’s employees with a section labeled FY 2020 Shortage and the amount of $448,448.86. A subsequent version was sent to him in which the section title was changed to Personnel costs COVID-19 with the same amount.
“That spreadsheet that shows they’ve changed the headlines instead of saying a deficit to say that COVID 19 is a pretty big problem,” he told The Associated Press, suggesting the Reynolds administration’s attempt to to hide the use of federal money was to fill a salary gap.
Alex Murphy, a spokesman for Reynolds, said in a statement that the US Treasury Department had allowed the use of coronavirus relief money to pay back governors’ salaries.
“During this time, the governor’s staff spent a vast majority of their time responding to the pandemic. In fact, many of Chief Executive Reynolds’s staff were working from the State Emergency Operation Center seven days a week to provide direct support to Iowans,” the statement said. “This has always been our justification for the cost. We are now working with Treasury to provide them with documentation, at their request.”
Reynolds previously spoke about the matter at a news conference in September after Laura Belin, publisher of the liberal-oriented online blog Bleeding Heartland, reported on the matter after searching for documents through Iowa’s public records law.
Reynolds said at the time that the federal coronavirus relief law made it possible to pay salaries for employees whose job requirements had changed significantly as a result of the coronavirus pandemic.
“CARES funding can be used for salaries. That’s very clear in what allowable allocations are,” she said.
Sand said his office was looking further into spending because the inspector general’s office had requested an investigation. He said the federal agency has reviewed and agreed with his office’s findings. It could be a problem that Reynolds’s office is trying to come up with documentation after telling the accounting department twice that they didn’t have such documentation, Sand said.
“If you come up with documentation afterwards after saying twice that you don’t have it, that should be concerning as well,” he said.
Sand said the state may be obligated to repay the money to the federal government.
The audit isn’t the first time Reynolds has spent federal funds for unapproved uses.
In December 2020, Reynolds had to return $21 million in COVID-19 relief money after using it to upgrade an outdated state information technology system.
The funds were initially allocated for payments related to the state’s contract with Workday, a cloud-based human resources, finance and planning system being implemented to modernize the state’s IT infrastructure. $4.45 million of the allocation had already been spent.
Reynolds said U.S. Treasury officials initially assured the state that the Workday project was a permitted expense, but have now determined that the payments were not expenses under the federal Coronavirus Aid, Relief, and Economic Security Act.