As of July 31, Reynolds has transferred $627.3 million from the $1.25 billion in federal funds Iowa got through the Coronavirus Aid, Relief and Economic Security, or CARES Act, passed by Congress in March, the Legislative Services Agency reported Wednesday.
One of the most recent transfers was $91 million to the Office of the Chief Information Officer for technology upgrades. Included in this is $50 million to fund grants to expand broadband services in Iowa, which could be connected to the pandemic because of the large number of Iowans working, learning and getting health care from home over the internet.
But also included is $21 million to help the state replace its budget, accounting and human services computer system with a cloud-computing system by Workday.
“Using CARES Act money to fund a payroll and finances computer system for the state seems to be a stretch,” said Sen. Joe Bolkcom, of Iowa City, the ranking Democrat on the Iowa Senate Appropriations Committee.
Asked Thursday morning for an explanation of how the transfer fits under the CARES Act, a spokesman for Reynolds did not provide one or respond later in the day to a follow up.
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.
When The Gazette in March detailed the unusual route the state took to arrive at a contract Workday, the governor’s office said Ketzner was not involved in the deal.
Reynolds initially planned to fund the annual payment to Workday with money from the Rebuild Iowa Infrastructure Fund, Bolkcom said. 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.
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 agency reported in its Wednesday fiscal brief.
These expenditures could include a direct COVID-19 response, such as medical or public health needs, or “second-order effects of the emergency, such as providing economic support to those suffering from employment or business interruptions due to COVID-19 business closures.”
CARES Act funding may not be used “to backfill the loss of state revenues that have resulted from the economic impacts of COVID-19” but may be used for temporary cash flow.
“I don’t know how, looking at the Treasury Department guidelines, how suddenly this becomes related to the pandemic,” Bolkcom said about the Workday transfer.
Sen. Claire Celsi, D-Des Moines, said she doesn’t want the state to have to repay the federal government $21 million if the feds decide Iowa didn’t spend the CARES Act money properly.
State Auditor Rob Sand, a Democrat elected to the job of reviewing state spending, plans to ask the governor’s office about the Workday transfer, spokesman Andrew Turner said in an email Thursday.
“Our office is aware of the transfer and we have questions,” he said.
Bolkcom said he’d rather see the coronavirus relief money pay for things like hazard pay for teachers or personal protective equipment that schools must buy before classes start. Reynolds is requiring all Iowa school districts to provide at least half of the core subject instruction time in-person unless a family opts for virtual learning.
Coy Marquardt, associate executive director of the Iowa State Education Association, said districts could use state help paying for masks and face shields as well as for technology to facilitate virtual learning.
“It’s certainly a significant cost. It’s a necessary cost,” Marquardt said. “It’s one of the other things the association has been pushing at the federal level. In next round of stimulus, more funding for public schools.”
©2020 The Gazette (Cedar Rapids, Iowa). Distributed by Tribune Content Agency, LLC.
