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Iowa’s spending up $3 billion in federal dollars, state auditor says

Iowa’s spending up $3 billion in federal dollars, state auditor says

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The Iowa State Capitol building Friday, July 31, 2020, in Des Moines.

DES MOINES — The state of Iowa spent about $12.3 billion in federal funds in fiscal 2020 that represented about a $3 billion increase — much of which was tied to the Coronavirus Aid, Relief and Economic Security Act — according to an audit issued Monday by State Auditor Rob Sand.

Sand said about $2.3 billion of the 32.7 percent spike in federal aid the state received during the 2020 fiscal year came from the CARES Act, while changes in non-CARES and non-loan programs included an increase of about $518 million in funding for Medicaid expenditures.

Expenditures directly related to the CARES programs, according to the 96-page audit released Monday, included:

• $1.4 billion in additional unemployment insurance

• $605 million from the Coronavirus Relief Fund

• $97 million for the Educational Stabilization Fund program

• $56 million in CARES-related supplemental School breakfast and lunch programs.

Expenditures for programs not related to CARES included:

• $4 billion for Medicaid

• $1.4 billion in capitalization grants for clean water state revolving funds

• $598.8 million for highway planning and construction

• $491.6 million for unemployment insurance

• $482.7 million for capitalization grants for drinking water state revolving funds, according to the report.

While state officials administered about 600 federal programs during the year ended June 30, 2020, a total of five programs accounted for about 70 percent of total federal expenditures not related to CARES funding.

In his audit, the Democratic state auditor reported nine internal control deficiencies and three instances of non-compliance at various state agencies within Republican Gov. Kim Reynolds’ administration — including $448,449 in unsupported salaries paid within the governor’s office from the Coronavirus Relief Fund.

According to Sand’s report, the control deficiencies he cited address issues such as lack of policies and procedures to ensure variances are identified and corrected, ways various reports are reviewed and approved — including all the proper information submitted to the federal government before the due date — and ensuring all required information is included.

In addition, he said there were three non-compliance findings addressing questioned costs of $113,813 paid to incarcerated individuals, $124,698 in payments to deceased individuals for unemployment insurance and the $448,449 in unsupported salaries paid from the Coronavirus Relief Fund.

He provided the state agencies with recommendations to address each of the findings.

“The governor had a budget shortfall, she had too many people on her personal staff and didn’t have a big enough money to pay them all, so instead of addressing either the budget that she had or the number of staff she had, she decided to use CARES Act money instead,” Sand said in an interview.

“We warned her back in October that it would be difficult for having her office’s salaries qualify as a CARES Act usage and gave her specific directions how to make it most likely to qualify,” Sand added.

He noted that requests for documentation were not provided and he expected federal overseers may request that some of the federal money not used for pandemic-related functions be returned.

Alex Murphy, Reynolds’ communication director, issued a response Monday saying the U.S. Department of the Treasury confirmed the use of Coronavirus Relief Funds to reimburse the salaries and benefits of a governor’s staff is an allowable expense.

“During this time, the governor’s staff spent a vast majority of their time responding to the pandemic. In fact, many members of Gov. Reynolds’ staff worked seven days a week out of the State Emergency Operation Center to provide direct support to Iowans. This has always been our justification for the expense,” Murphy said.

“We are now working with Treasury to provide them documentation, per their request.”

A copy of the State Auditor’s report can be viewed at


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