Democrats: Reynolds’ administration reporting delays could jeopardize university funds

Gov. Kim Reynolds’ administration drew criticism from Democrats Wednesday for delays in financial reporting that could impact Iowa universities’ access to federal funds.

The comments come following a report by Bleeding Heartland, a progressive blog covering Iowa politics, that found Iowa universities could be impacted by reporting delays in the future. The Iowa auditor’s office must publish a “Single Audit” each year as a non-federal entity spending a certain amount of federal funds; that audit requires information compiled and published by the state in its Annual Comprehensive Financial Report (ACFR).

The federal deadline for state’s single audits is March 31 each year, a deadline Iowa has missed in previous years. In letters between Iowa Auditor Rob Sand’s office, Iowa’s three public universities and the U.S. Department of Education, an arrangement was reached for Sand’s office to file three audits on the universities by the end of June — instead of that information being included in a statewide Single Audit, reliant on the ACFR, compiled by the Iowa Department of Administrative Services.

Iowa is one of six states to not have submitted an ACFR for fiscal year 2022 as of June 26. As of  June 28, the auditor’s office has released audits on the University of Iowa and University of Northern Iowa.

State Sen. Claire Celsi, D-West Des Moines, called for the governor to put more resources into ensuring Iowa can file its ACFR report on time in the future.

“I urge the Reynolds Administration to put extra resources behind this so that the state can file next year’s report on time and get back on track,” Celsi said in a statement. “It’s disappointing that the Reynolds Administration has failed to prioritize this issue, putting funding at risk for our Regents universities.”

Officials with the Department of Administrative Services and Department of Management could not be reached for comment.

In a March letter to the director of Iowa’s Department of Management, the auditor’s office chief of staff John McCormally said he understood the four staff on the administrative services Generally Accepted Accounting Principles (GAAP) team, which compiles the ACFR, were all new to the project in 2021 and are facing a “steep learning curve.”

“While the GAAP Team has been working to complete these items, their progress must significantly improve or the state risks significant delays in receiving federal funds,” he said in the letter. “Such delays could have serious consequences.”

McCormally wrote that some of the delay may have been caused by issues with implementation of Workday, the state accounting and human resources system the state contracted with in 2021 but ultimately scrapped in March before its launch this year.

ISU switched over to using the Workday system in 2020, and faced significant delays starting that year in meeting the typical reporting deadlines Bleeding Heartland reported. In the Wednesday news release, Senate Democrats said the years of delay were due to the “botched” implementation of the new financial software.

While the solution may work for Iowa universities to continue receiving federal funds this year, the solution of filing Single Audit reports for each university is not a permanent solution, Celsi said.

“The Reynolds Administration has not acted with a sense of urgency to fix this problem,” Celsi said. “Auditor Rob Sand’s office has assisted the universities on a work-around, but that still doesn’t solve the problem going forward.”