Name: Gov. Kim Reynolds: State will return CARES Act money used to pay for IT upgrades
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Gov. Kim Reynolds: State will return CARES Act money used to pay for IT upgrades

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Des Moines RegisterView CommentsAfter a dispute with the U.S. Treasury Department, Gov. Kim Reynolds said Monday she has directed the Iowa Department of Management to return $21 million in federal coronavirus funding that the state was using to pay for a new accounting system.Reynolds earlier this year had directed part of , or CARES, Act funding toward the state's contract with Workday for&nbsp;a cloud-based budget, accounting and human resources computing system.But the transaction came&nbsp;under scrutiny by Iowa&nbsp;Auditor Rob Sand and the U.S. Department of the Treasury's inspector general, who said the expense was not an allowable use of the state's CARES Act funding, which is&nbsp;intended for necessary expenditures incurred as a result of COVID-19.Reynolds' administration had justified the allocation by saying the software would help to quickly assist essential employees during the pandemic.A news release from the governor's office issued Monday said the Reynolds administration still believes the allocation was an allowable expense, but that it will return the funding to the state's Coronavirus Relief Fund by Dec. 18.&nbsp;As of Monday, the state had spent $4.45 million of the $21 million it had allocated for the project.&nbsp;"Following multiple conversations with the Treasury Department last spring, we believed we had assurances that the upgrade to Workday qualified as an allowable expense," Reynolds said in the&nbsp;release. "We would not have moved forward without those assurances."&nbsp;The state originally entered the&nbsp;contract with Workday before the pandemic, but the state legislature did not fund the contract in its fiscal year 2021 budget.In October, Sand and the Treasury Department had separately notified Reynolds' administration that Iowa had&nbsp;misallocated the money.&nbsp;Sand warned that the state could be required to repay the money if it did not reroute it to appropriate pandemic expenses by the end of the year. Richard Delmar,&nbsp;deputy inspector general for the Treasury Department,&nbsp;requested that state provide his office with a corrective action plan by Oct. 26.Reynolds'&nbsp;legal counsel,&nbsp;citing the lack of a specific line item in the state budget as a reason&nbsp;Iowa should have the flexibility to spend the money on the&nbsp;system.But Reynolds' news release on Monday said the Treasury Department had "affirmed" its determination that the payments were not allowed under the CARES Act.Sand told the Des Moines Register that he was pleased to hear the governor had decided to return the funds.&nbsp;"The big winners here at the end of the day are Iowans," he said. "That's $21 million that should now get spent in a way that actually mitigates the pandemic, instead&nbsp;of just buying toys for state employees."Replacing the state's IT systems will continue to be a need, the release said. The state will continue the project as planned, and supplemental funding will be needed to support the project, it said.&nbsp;So far, Iowa has allocated all but $47.3 million of its $1.25 billion in CARES Act funding. The deadline to allocate the funding is Dec. 30. Reynolds' news release said the state plans to allocate that additional funding by the deadline, but that an extension of the&nbsp;deadline would allow the state to use the funding to support additional needs related to the pandemic.&nbsp;Ian Richardson covers the Iowa Statehouse for the Des Moines Register. Reach him at , at 515-284-8254, or on Twitter at .View Comments

Des Moines RegisterView CommentsAfter a dispute with the U.S. Treasury Department, Gov. Kim Reynolds said Monday she has directed the Iowa Department of Management to return $21 million in federal coronavirus funding that the state was using to pay for a new accounting system.Reynolds earlier this year had directed part of , or CARES, Act funding toward the state's contract with Workday for&nbsp;a cloud-based budget, accounting and human resources computing system.But the transaction came&nbsp;under scrutiny by Iowa&nbsp;Auditor Rob Sand and the U.S. Department of the Treasury's inspector...

Gov. Kim Reynolds: State will return CARES Act money used to pay for IT upgrades

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