Reynolds defends use of federal virus-relief dollars for state salaries

Gov. Kim Reynolds speaks during a news conference Sept. 16, 2020, at Iowa PBS. (Screen shot from Iowa PBS livestream)

Gov. Kim Reynolds on Wednesday defended her use of federal coronavirus-relief dollars for state employee salaries, saying it is allowed under program guidelines and warranted because state staff were diverted from regular duties to full-time virus management.

Some Democratic state senators called Wednesday for an investigation into a report by the blog Bleeding Heartland that the Republican governor spent nearly $450,000 in federal CARES Act dollars issued for coronavirus relief on salaries for existing state staff.

“At a time when the number of jobless Iowans is through the roof and many Iowa businesses are hurting because of the pandemic, Iowa taxpayers should have confidence that federal COVID relief funds are being used only to help them,” said Sen. Joe Bolkcom, D-Iowa City, ranking Democrat on the Senate Appropriations Committee, in a news release.

Reynolds said it is “very clear” that federal CARES Act dollars can be used for salaries.  When COVID-19 hit Iowa in March, she said, “I moved the entire team out to the state emergency operations center because I felt that it was extremely important and I think that was one of the reasons that we were able to respond to COVID in the manner that we did.”

Reynolds said half of the staff in her office worked at the emergency center, “seven days a week, straight, probably nine to 10-hour days, on COVID-19.”  The rest of the staff, working from the Capitol, were “in full response to Iowans, to answer questions, to get information out, and it took all of them, working around the clock, similar timelines, to meet the needs of Iowans …”

The Senate Democrats’ release said the use of money for salaries was “puzzling” because the Legislature appropriated more than $4.6 million to cover the cost of running the governor’s office, including salaries and benefits.

“We need to find out what the governor did with the extra money. The intent of the federal aid was not to allow the governor to set up a slush fund,” Bolkcom said. “We also need to find out if this diversion is continuing.”

The Legislature’s appropriation to the governor’s office and other state agencies typically does not specify an amount to be spent on salaries and leaves it to the agencies to allocate money for salaries in their budgets. The governor’s office routinely operates under agreements that involve having some governor’s staff paid from other state agencies. The governor’s chief of staff, Sara Craig Gongol, told reporters Wednesday that money would likely go back to those agencies for other purposes or it might be remitted back to the state general fund.

Bolkcom accused the governor of “hiding” the transactions because none of the documents released to the public and legislators contained any information about using CARES Act money for salaries.

“Instead of transparency by the governor and her staff, they are hiding the ball from Iowa taxpayers,” Bolkcom said.

Gongol said the money had not been transferred yet, which is why it had not appeared on public documents.  She noted that all of the spending will be subject to review by the state auditor.

Lawmakers this spring gave the governor broad authority to manage the federal coronavirus relief money, as well as allocate state money within state agencies. Gov. Kim Reynolds has publicly declared an intention to be transparent with spending and has suggested the state would create a website so the public can view transactions from CARES Act dollars. Reynolds’ staff said after the news conference that website was still in the works.

State Sen. Claire Celsi, D-West Des Moines, will request an expedited review by the state auditor of the spending, according to the Democratic release. Sen. Tony Bisignano, D-Des Moines, also will ask the Legislature’s Oversight Committee to convene to review the issue. The Democrats also said they would contact the U.S. Government Accountability Office to investigate whether the salary payments were an appropriate use of the CARES Act dollars.