Why oversight of Iowa's COVID-19 spending just got more important

Three state agencies that play important roles in Iowa’s use of COVID-19 relief funds will have new leadership in the coming weeks.

The turnover underscores the need for lawmakers, state and federal auditors, and the news media to keep a close watch on how Governor Kim Reynolds’ administration spends money Congress approved last year to address the coronavirus pandemic.

The governor decided how Iowa used $1.25 billion in federal funds received through the Coronavirus Aid, Relief and Economic Security (CARES) Act, enacted last March. Reynolds will also have discretion over some of the funding coming to Iowa via the Coronavirus Response and Relief Supplemental Appropriations Act of 2021, which President Donald Trump signed in late December.

NEW DIRECTOR FOR PROCUREMENT AGENCY HAS LITTLE RELEVANT EXPERIENCE

The governor’s office announced on January 11 that Reynolds appointed Adam Steen to lead the Department of Administrative Services. The news release stated, “Steen will replace Jim Kurtenbach, who resigned earlier this year.” In fact, Kurtenbach resigned in February 2020. Steen will succeed Paul Trombino III, who has served as the agency’s interim director since early March 2020.

The Department of Administrative Services has many functions, such as handling human resources and payroll for state government. Its most relevant role for the current discussion is procurement of goods and services.

The state of Iowa signs many large contracts every year. Last March, Reynolds suspended competitive bidding requirements for any contract related to the COVID-19 pandemic. She’s continued that policy in subsequent disaster emergency proclamations, most recently in section 146 of the one dated January 7.

Several no-bid contracts signed during Trombino’s tenure have drawn scrutiny. For example, Ryan Foley reported for the Associated Press last May,

In three contracts worth $7.2 million, the state agreed to purchase 1 million isolation gowns and 100,000 clear plastic goggles through Competitive Edge Inc., a Des Moines business that has never sold either. The company supplies promotional items like T-shirts, and has long been a go-to vendor for Republican campaigns buying yard and barn signs.

Owner David Greenspon, a former Republican appointee on the Iowa Finance Authority board, said state agencies reached out unsolicited asking for help securing supplies from China because he has long imported from there. Now Greenspon said he’s overseeing manufacturing in three Chinese factories and the items will be delivered to Iowa over the next month. […]

Greenspon is charging the state $6.96 per gown and $2.59 for each pair of goggles. He said neither item will be medical grade.

Foley reported in June that the state had signed another $1.32 million contract with Greenspon’s company to provide 1 million reusable cotton face masks labeled “not for use in hospitals or for medical purposes.”

State Auditor Rob Sand said last May his office was reviewing an unspecified number of no-bid contracts connected to COVID-19 or personal protective equipment (PPE).

I was critical of Reynolds’ appointment of Kurtenbach in 2019, but he had far more relevant experience for this job than does Steen.

Iowa law states that the Department of Administrative Services director “shall be professionally qualified by education and have no less than five years’ experience in the field of management, public or private sector personnel administration including the application of merit principles in employment, financial management, and policy development and implementation.” Steen studied business and marketing at Minnesota State University in Mankato, but it appears he left college without completing a degree.

Reynolds said in this week’s news release, “Adam has an impressive background in finance management, consulting, and making a career out of growing jobs and investing in small businesses across Iowa. I appreciate his business-minded focus and believe it will be a great fit at the state of Iowa’s human resources agency.”

Steen’s LinkedIn profile shows a little less than three years experience as Director of Business Development for the financial planning firm Syverson Strege, where Steen attended “to the relationship development, personal development, and business development of the firm and its clientele.”

Steen started his own business in 2008. The governor’s news release described 25 Connections as “a senior level management consulting firm,” and various Iowa media organizations transmitted that characterization verbatim. Access to the 25 Connections website is now restricted, but captures from the “Wayback Machine” indicate that only Steen and one other person were ever listed as contacts. An origin story published on that site recounts some time playing minor league baseball, a one-year stint selling insurance, and a little more than three years marketing and networking for father Tom Steen’s broker/dealer company, Transition Capital Management, before the creation of 25 Connections.

Adam Steen’s LinkedIn profile describes 25 Connections as “a management consulting and professional speaking entity where I focus on relationship development as a means of creating personal, professional, and corporate growth.” One bio published in the context of that motivational speaking work says Steen “believes that relationships are the key to growth within any youth group, any business or any non-profit organization.”

I’m searching in vain for any sign that Steen has the skill set to handle procurement for a large organization. Relationship building may be valuable in many areas of life, but giving a networking and marketing specialist the authority to sign no-bid contracts for the state could easily lead to cronyism.

Steen also lacks any background in human resources, which is an important part of the Department of Administrative Services’ work. As interim director, Trombino signed off on job reclassifications and pay increases, including a 45 percent raise for Iowa’s State Medical Director Dr. Caitlin Pedati, which violated state policy in several respects.

In case you were wondering, neither Adam Steen nor his father are major Republican donors. Both have periodically contributed to GOP candidates (Adam gave $250 to Reynolds’ 2018 campaign), and Tom Steen has also supported social conservative organizations linked to Danny Carroll and Bob Vander Plaats (the elder Steen used to work at the precursor to the FAMiLY Leader organization).

Adam Steen is a credentialed minister in the Assemblies of God and, according to one bio, “states with boldness that he is put on this Earth to share his commitment to Jesus Christ regardless of the venue.” Perhaps that quality appealed to Reynolds as she considered whom to put in charge of this state agency. Last April, the governor used her office to promote tenets of Christianity and hailed efforts in “glorifying Jesus Christ through the public affirmation of His sovereignty over our state and our nation.”

PAUL TROMBINO TO LEAD HOMELAND SECURITY DEPARTMENT

Trombino has served as chief operating officer in the governor’s office since early 2019 and continued to hold that position while running the Department of Administrative Services. But on January 14 Reynolds named him to lead Iowa’s Department of Homeland Security and Emergency Management, effective January 22. Iowa’s Homeland Security Director Joyce Flinn had previously announced plans to retire.

Trombino has worked closely with state agencies on many areas of COVID-19 relief and participated in some of the most controversial decisions, such as awarding a $26 million no-bid contract for the Test Iowa program. He and Reynolds were among the high-ranking state officials who appeared in a promotional video for DOMO, one of the Utah-based companies that were parties to that contract. DOMO took the video and accompanying web page offline hours after Foley reported on the video, but I’d saved a copy earlier.

Last month, Bleeding Heartland submitted records requests related to DOMO’s video to the governor’s office, the Iowa Department of Public Health, and Department of Administrative Services (which handles reservations and access to the capitol complex). None have provided any records, so I have been unable to confirm when that video was produced or whether DOMO formally applied to film inside the state capitol building.

Foley noted that the appearances in DOMO’s video “go against long-standing guidance to avoid any hint of preferential treatment in relationships with contractors.” Gary Dickey, who was legal counsel for Governor Tom Vilsack, told the AP the incident “smacks of cronyism” and that it “is way beyond established norms” for officials to be in a commercial for a private company.

Trombino also played a central role in negotiating two big contracts the state signed with Workday to upgrade computer and software systems. Reynolds then sought to use CARES Act funds to cover the $21 million contract that had been signed in October 2019, months before coronavirus reached Iowa.

The governor disputed state and federal auditors’ findings that the Workday contract was not an allowable use of COVID-19 relief funding. But Reynolds agreed last month to return the $21 million to the Coronavirus Relief Fund.

In his new position, Trombino will be more directly involved in managing Iowa’s response to the pandemic and other disasters. At least $67 million in federal CARES Act funds are going through the Homeland Security department; most of that total ($60 million) is tied to the state or local match for the Federal Emergency Management Agency’s Public Assistance Program. Another $1 million, which has mostly been spent, was earmarked for the Feeding Iowans Initiative. Homeland Security has received but not yet spent $5 million for “COVID-19 Surge Medical Support.”

Of particular interest to this reporter is the $1 million Homeland Security received from Iowa’s Coronavirus Relief Fund for “State Government COVID Staffing.” As Bleeding Heartland exclusively reported last year, the $448,449 in CARES Act funds Reynolds approved to cover salaries and benefits for 21 of her permanent staffers passed through Homeland Security, an arrangement not used to pay employees in any other state entity addressing the pandemic. Other documents revealed officials calculated the fiscal year 2020 shortfall in the governor’s office budget, then redefinined that amount ($448,449) as “COVID-19 Personnel Costs.”

A report dated January 15 indicates the remaining $551,551 allocated for “State Government COVID Staffing” has not been spent. A Homeland Security communications staffer told me last year, “Although that funding was transferred to our department to process, we are not the decision makers on how it will be spent.”

Trombino will be able to sign off on transferring those funds wherever Reynolds wants, possibly to help cover the governor’s personnel costs during the current fiscal year. Total expenditures to support the governor’s office operations during fiscal year 2020 exceeded the state budget appropriation by nearly $900,000.

Incidentally, Reynolds named Taryn Frideres to be her new chief operating officer this week. I’ll be checking to see whether other agencies cover all or part of Friederes’ compensation. Several agencies combined to pay portions of Trombino’s salary during the first half of 2019, and the Department of Administrative Services had been paying 100 percent of his compensation since early March 2020, saving the governor’s office $63,952 from March 7 through June 30. I am seeking to confirm whether the human resources agency continued to pay Trombino from July 1, 2020 through early this week, when Reynolds appointed Steen.

REYNOLDS TO NAME NEW BUDGET DIRECTOR SOON

Another big change in the Reynolds administration will occur on January 31, when Dave Roederer retires after 38 years in state government, the last ten leading the Iowa Department of Management. That agency handles state budget planning as well as disbursements from the general fund and various other funds.

Staff from the Department of Management maintain databases on COVID-19 spending, including a table showing thousands of individual expenditures. Records this agency provided to Bleeding Heartland last year revealed that Reynolds had used CARES Act funding to support some of her staffers’ salaries and benefits.

The governor’s office stopped complying with Iowa’s open records law last spring and has left numerous requests from reporters or others unfulfilled for many months. Communications staff did not respond to Bleeding Heartland’s many inquiries about the office budget or employees’ compensation.

Reynolds hasn’t announced Roederer’s successor yet. If the new director takes the same approach to transparency as the governor’s staff, Iowans could be left in the dark on some big decisions, not only connected to pandemic spending.

NEW APPOINTEES NEED IOWA SENATE APPROVAL

Most state agency directors are subject to Iowa Senate confirmation, which requires a two-thirds vote (at least 34 of the chamber’s 50 members). Republicans now hold 31 Senate seats, with a chance to add another, depending on the results of a January 26 special election. Either way, Democrats have the potential to block one or more of Reynolds’ appointees.

Over the past decade, Senate Democrats have used that power sparingly, confirming hundreds of Reynolds’ nominees (and those of her predecessor, Terry Branstad) each legislative session while rejecting a handful at most.

That said, the new appointees and Trombino in particular will face tough questions. CORRECTION: The Homeland Security director does not need to be confirmed in the legislature.

State Senator Claire Celsi, the ranking Democrat on the Senate Government Oversight Committee, told Bleeding Heartland on January 15 that she was sorry to hear Roederer was retiring. She described him as an “old school” type who “acknowledged that there were some rules to the road.” He was truthful and respected disclosure requirements.

Claire found Trombino’s appointment to Homeland Security “deeply disturbing.” She expressed concern about the potential to “shuffle money around” and not be forthcoming about the use of funds. “I hope governor Reynolds is committed to transparency in the budget” and doesn’t try to hide some transactions, Celsi added.

State Representative Chris Hall, the ranking Democrat on the Iowa House Appropriations Committee, echoed those sentiments in comments on the latest administration changes. He told Bleeding Heartland on January 15,

As of right now, more than $4 billion federal dollars have been awarded to Iowa for COVID relief. It has become apparent that Governor Reynolds improperly used portions of the funds to approve no-bid contracts and pay for the salaries of her own staff – rather than use those dollars to help families and front line workers during the pandemic.

These decisions should be further examined during Mr. Trombino’s transition because of his ties to them. Look no further than the Workday contract, which will cost taxpayers $21 million after a bipartisan group of legislators declined to fund the contract last year, only then for the Governor to misuse federal funds later clawed back by the Treasury Department. Everyone but the Governor’s office is in agreement – the funds would be better spent supporting Iowa families and our economy right now.

Hall noted that he had “always enjoyed listening to and learning from” Roederer, and like Celsi, wished him the best in retirement.

Top artwork by Tada Images, available via Shutterstock.

  • This is important reporting...

    ….and I hope all Democratic legislators will read it, though it won’t help their blood pressure any more than it helped mine.

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