The state of Iowa’s contract with Workday to upgrade computer systems “is not an allowable expenditure” under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the U.S. Treasury’s Office of Inspector General informed Iowa Department of Management Director David Roederer on October 16.

The State Auditor’s office released a copy of the letter on October 21. State Auditor Rob Sand announced two days earlier that he had also informed Governor Kim Reynolds and Roederer that spending $21 million on Workday-related costs was “not an appropriate use” of the Coronavirus Relief Fund.

Governor Kim Reynolds erred in directing that $21 million in federal funding from the Coronavirus Aid, Relief and Economic Security (CARES) Act be used to cover the cost of a software system purchased before the COVID-19 pandemic, according to State Auditor Rob Sand.

Sand announced on October 19 that he and the U.S. Treasury Department’s Inspector General “have advised Iowa Governor Kim Reynolds that her decision to use millions of CARES Act dollars to help implement a new software system for state government was not an allowable use of the funds.” The Treasury Department and governor’s office did not respond to requests for confirmation and comment.

Sand also described as “questionable” the use of CARES Act funds to pay the governor’s permanent staff. Bleeding Heartland was first to report last month that Reynolds directed $448,449 in COVID-19 relief funds to pay a portion of salaries and benefits for 21 of her staffers from mid-March through June 2020. Sand warned that a federal audit may eventually determine that the payments did not meet requirements, so reallocating the funds to purposes clearly allowed under the CARES Act would be less risky for taxpayers.

State Auditor Rob Sand had “great news” to share with members of the Iowa House and Senate Appropriations Committees in May. Federal officials had agreed not to demand repayment for alleged overbilling, provided that Iowa changed its billing practices for future audits. The savings to the state would amount to tens of thousands of dollars for each fiscal year.

Documents Bleeding Heartland obtained through a public records request confirm that key Reynolds administration officials were on board with the reform plan, and Iowa Senate appropriators took it up in June as the legislature was completing its work.

The records also show that State Representatives Gary Mohr and John Landon refused to move the fix through the Iowa House.

What they don’t explain is why.

Catching up on news overshadowed by the biggest Iowa politics story of the week: on May 23 a group of Iowa House Democrats dropped their legal challenge to Governor Kim Reynolds’ use of emergency funds without legislative approval last September. Reynolds transferred $13 million from the Iowa Economic Emergency Fund to cover a shortfall in the fiscal 2017 budget, despite a warning from State Treasurer Michael Fitzgerald that Iowa law did not permit that action.

State Representative Chris Hall, the ranking Democrat on the Iowa House Appropriations Committee, filed suit in January, charging that Reynolds and Department of Management Director David Roederer “conspired together to unlawfully appropriate and misuse state funds.” The lawsuit alleged that the governor acted unilaterally in order to avoid the political fallout from calling the legislature back for a special session. House Democrats Marti Anderson, Liz Bennett, Bruce Hunter, Jerry Kearns, Monica Kurth, and Amy Nielsen joined the legal action a few weeks later.

Republican legislators tacitly acknowledged that Reynolds broke the law. They added language to a bill cutting current-year spending that retroactively legalized the governor’s action and appropriated $13 million from the emergency fund to the general fund for fiscal year 2017. (See page 8 of Senate File 2117, which both chambers passed along party lines in March.)

“Our legal challenge held Governor Reynolds and Republicans accountable, and it did so without costing taxpayers a single dime,” Hall said in a news release enclosed in full below. “We have seen too many cover ups and not enough leadership from the Reynolds administration. This is a victory for taxpayers and ensures that our tax dollars will be spent according to the law.”

UPDATE: I should have mentioned that there would be little to gain by following through with this lawsuit. Once the legislature passed and Reynolds signed Senate File 2117, a court would almost certainly have dismissed the case as moot.

UPDATE: Plaintiffs dropped this lawsuit in May 2018 after Republican legislators retroactively legalized the governor’s fund transfer. Original post follows.

State Representative Chris Hall filed a lawsuit today, charging Governor Kim Reynolds and Department of Management Director David Roederer “conspired together to unlawfully appropriate and misuse state funds.” The ranking Democrat on the Iowa House Appropriations Committee is seeking to void “all actions taken as a result of the unlawful Official Proclamation signed on September 28, 2017,” which transferred $13 million from the Iowa Economic Emergency Fund.

That order allowed Reynolds to cover a projected budget shortfall at the end of fiscal year 2017 without calling a special legislative session. But State Treasurer Michael Fitzgerald warned the governor that the planned transfer “would not be in compliance with Iowa law.” Hall’s petition, enclosed in full below, points to the same Iowa Code provision Fitzgerald cited in his letter to the governor.

Sounding more like a Republican loyalist than a hard-nosed fiscal analyst, State Auditor Mary Mosiman told reporters this week that Iowa’s budget for the year beginning July 1 is “stable” and “responsible.”

Mosiman also asserted that Iowa has “practically eliminated using one-time revenue sources for ongoing expenditures,” even though Governor Kim Reynolds recently confirmed the state will need to dip into reserve funds a second time to cover a third major revenue shortfall during the current fiscal year.

While speculating on why Iowa’s revenues have fallen well below projections, Mosiman echoed excuses offered by leading Republican politicians, ignoring a new business tax break that has been a far more important factor.

Iowa’s self-styled “Taxpayers Watchdog” may come to regret staking her credibility on the wisdom of GOP budget planning.

Who knew that when you tell a state agency leader to save another $1.3 million somehow, he might cut some important programs and services? Not State Representative Dave Heaton, the Republican chair of the Iowa legislature’s Health and Human Services Appropriations Subcommittee.

Who knew that when you impeach a mayor using a kangaroo court proceeding, a judge might order the mayor reinstated while her appeal is pending? Not Muscatine City Council members.

Follow me after the jump for more on those stories. This is an open thread: all topics welcome.

I’m also interested to know what readers think about Iowa Insurance Commissioner Doug Ommen’s request to waive certain provisions of the Affordable Care Act in order to bring Wellmark Blue Cross/Blue Shield back to Iowa’s individual insurance market for 2018. Elements of the “stopgap” measure violate federal law; health care law expert Timothy Jost told the Des Moines Register’s Tony Leys that some parts of Ommen’s proposal are “extremely problematic” and not likely “doable.” Writing in the Wall Street Journal, Anna Wilde Mathews and Louise Radnofsky saw the Iowa developments as “a key test of the ability to modify the [Affordable Care Act] through executive authority.” Slate’s Jordan Weissmann agreed.

Governor Terry Branstad’s budget director has finally revealed how $11.5 million in “miscellaneous” spending cuts will be spread around state government before the end of the current fiscal year on June 30. As expected, the ax will fall most heavily on higher education and human services–just like Branstad wanted all along.

Elected officials often bury bad news in a late Friday afternoon dump, but Branstad and Lieutenant Governor Kim Reynolds went one step further to evade accountability: they didn’t even announce the cuts in a press release. Rather, at around 4:00 pm, Department of Management Director David Roederer relayed the news in a letter to the Iowa House chief clerk and the secretary of the Iowa Senate.

Iowa House and Senate Republicans have plausible deniability after calling for $11.5 million in unspecified “Department Operational Reductions” as part of Senate File 130, the “deappropriations” bill GOP lawmakers approved in late January. Let Roederer do the dirty work.

After the jump I’ve posted the document showing how much the latest cuts will affect each department or agency. For comparison, I also enclosed Branstad’s original spending cut proposal, announced January 10, and a document comparing those planned cuts with the deappropriations bill’s provisions.

See important update below: Jon Muller questions whether the University of Iowa “committed an act of scholarship fraud.”

Three weeks after Governor Terry Branstad signed into law large mid-year budget cuts for Iowa’s state universities, some 3,015 incoming or current students at the University of Iowa learned that they will be picking up part of the tab.

Governor Terry Branstad has rarely found himself at odds with any powerful farm lobby group. In 1995 he signed a law banning agricultural zoning, which fueled explosive growth of confined animal feeding operations across Iowa. Since returning to the governor’s office in 2011, he has named several agribusiness representatives to the the Environmental Protection Commission. He signed the probably unconstitutional “ag gag” bill targeting whistleblowers who might report alleged animal abuse. He moved to protect farmers from state inspections for electrical work. He joined a poorly-conceived and ultimately unsuccessful lawsuit seeking to block a California law on egg production standards. He has consistently rejected calls to regulate farm runoff that contributes to water pollution, instead supporting an all-voluntary nutrient reduction strategy heavily influenced by the Iowa Farm Bureau.

Despite all of the above, the governor’s two-year budget blueprint contains an obscure proposal that will draw intense opposition from Big Ag. By this time next year, the fallout could cause political problems for Branstad’s soon-to-be-successor, Lieutenant Governor Kim Reynolds–especially if Cedar Rapids Mayor Ron Corbett challenges her for the 2018 GOP nomination.

Not for the first time and probably not for the last time, Governor Terry Branstad dropped a lot of line-item vetoes late in the afternoon before a holiday weekend. Early news reports are understandably focusing on the vetoes of one-time funding for K-12 education and state universities, as well as language that would have kept mental health institutions in Clarinda and Mount Pleasant open. Bleeding Heartland has a post in progress about the fallout from those actions and others, including Branstad’s decision to strike language that would have expanded child care assistance.

Democratic State Representative Sharon Steckman called attention to several other line-item vetoes that flew below the radar yesterday. One of them seems particularly important, as it could put the State of Iowa at odds with U.S. Department of Labor demands to “strengthen Iowa’s compliance with Federal law” and keep administrative law judges “free from actual or perceived intimidation.”

JULY 6 UPDATE: The vetoed language pertained to administrative law judges working for the Public Employment Relations Board, not Iowa Workforce Development; see further details below.

The U.S. Department of Labor’s Employment and Training Administration has given Iowa Workforce Development Director Beth Townsend a list of tasks to “strengthen Iowa’s compliance with Federal law” and address various concerns about the actions of Teresa Wahlert, Townsend’s predecessor.

It’s another sign that while Wahlert may not be Governor Terry Branstad’s worst appointee during his current administration, she’s a solid contender.

Governor Terry Branstad responded today to two political scandals that broke while he was on vacation last week. The big news was the governor signing an executive order “to increase accountability, openness and transparency of employee settlements.”

Branstad’s behavior reflects an odd understanding of those words. He is not holding anyone accountable for forcing out permanent employees and attempting to keep settlement deals a secret. His administration’s alleged “thorough review” of the deals took place behind closed doors over the span of a few days. Branstad rejected any outside investigation of the matter and dismissed accusations against Iowa Workforce Development Director Teresa Wahlert without even basic fact-finding.  

While Governor Terry Branstad vacations in Arizona this week, his administration is facing new allegations of misconduct. As first reported in the Sunday Des Moines Register, at least six former state employees were offered secret settlement deals after claiming they were forced out of their jobs for political reasons. Today, Democratic State Senator Bill Dotzler announced that he is seeking a federal investigation into the actions of Iowa Workforce Development Director Teresa Wahlert, whom Dotzler accused of interfering with the work of administrative law judges.

After the jump I’ve posted several links about both scandals as well as some political reaction. Any relevant comments are welcome in this thread.

Governor Terry Branstad will be shopping for a new chief of staff for the first time since the 1990s. Jeff Boeyink announced today that he is stepping down for an unspecified private sector job, effective September 6. After many years with the conservative advocacy group Iowans for Tax Relief, Boeyink briefly served as executive director of the Republican Party of Iowa before leaving to manage Branstad’s 2010 gubernatorial campaign. After the 2010 election, Boeyink co-chaired the governor’s transition team, and he has served as chief of staff ever since.

I’ve posted the press release from the governor’s office after the jump. Note the careful mention of Branstad’s “potential” re-election bid, and the conspicuous effort to mention Lieutenant Governor Kim Reynolds’ name and title as often as possible. The governor’s re-election campaign has engaged in similar branding of the Branstad-Reynolds “team,” fueling rumors in some circles that Reynolds will become the last-minute gubernatorial candidate next spring.

The Des Moines Register’s Jennifer Jacobs listed some possible successors to Boeyink. The governor’s legal counsel Brenna Findley used to serve as Representative Steve King’s chief of staff before she ran for Iowa attorney general in 2010. David Roederer has long been in Branstad’s inner circle and now heads the Iowa Department of Management. Former Iowa GOP staffer Chad Olsen is currently chief of staff for Secretary of State Matt Schultz. Michael Bousselot has been advising Branstad on health care and other issues. Sara Craig was state director of Mitt Romney’s presidential campaign in Iowa before the 2012 caucuses. Matt Hinch has held many political jobs and is now senior vice president of government relations and public policy for the Greater Des Moines Partnership. I can’t imagine that Doug Gross would want to go back to the job he held nearly 30 years ago. Former Iowa GOP Chair Matt Strawn is busy with his new consulting and lobbying firm.

Debi Durham’s appointment as economic development leader was the big news of the week from Governor-elect Terry Branstad’s camp, but he and his close advisers continue to lay the groundwork for his administration.

After the jump I catch up on stories about the state budget, inauguration plans, and top Branstad donors from the past year.

Governor-elect Terry Branstad today put Debi Durham in charge of job creation for his administration. She will start as head of the Iowa Department of Economic Development, which Branstad plans to convert into a public-private partnership. Durham’s work will be crucial for some of Branstad’s central campaign promises: creating 200,000 new jobs, increasing family incomes by 25 percent, and reviewing all state economic development programs to discard ones that don’t work. Branstad has said he will travel widely to sell Iowa to the business community, and Durham will be a partner in those marketing efforts.

Durham has worked for the Siouxland Chamber of Commerce for 17 years, and “chairs the board of the Iowa Chamber Alliance, a coalition representing the chambers of commerce in the state’s 17 largest metro areas.” She told reporters that leaving Sioux City was a hard choice. Outside economic development circles, she is best known as the Republican nominee for lieutenant governor in 2002, the year Doug Gross lost to Governor Tom Vilsack. Bret Hayworth wrote a good profile of her during the 2002 campaign. Incidentally, Gross also intended to remake IDED into a public-private partnership. Yet again, Branstad is following his former chief of staff’s playbook. David Roederer, who also headed Branstad’s staff in the past and will run the Department of Management in the new administration, has worked closely with Durham too. He was executive director of the Iowa Chamber Alliance during her time as board chair.

During this year’s campaign, Governor Chet Culver said IDED already has plenty of business input and has helped keep Iowa’s unemployment far below the national average. He also cited news reports showing that the Indiana Economic Development Corporation, which Branstad embraced as a model, touted “bogus” job creation claims and concealed information about tax credits some companies received. Iowa legislators should ensure that the revamped IDED doesn’t have similar transparency problems. Branstad can’t restructure economic development programs by government directive; he needs a new state law for that.

Culver appointed Durham to the Iowa Department of Transportation Commission and “spoke highly” of her during the September gubernatorial debate in Sioux City. Assuming the Iowa Senate confirms Durham (which should be no problem), she may need to give up her position on the transportation commission. If so, expect Branstad to appoint someone friendly to road-builders’ interests.

In related news, Branstad is raising money from private donors to help pay for the transition from Chet Culver’s administration to his own. Current Iowa law set aside only $10,000, clearly not enough to cover those costs. I look forward to seeing the list of donors. People looking to preserve certain business tax breaks or economic development incentives may be eager to help the new administration.

UPDATE: From Jason Clayworth’s blog at the Des Moines Register:

“Obviously when you hear private/public partnership that is the biggest question is the transparency,” Durham said. “What I can assure you and I’m going to take my lead from Gov. Branstad. Everything about Gov. Branstad and this administration is transparent  So anything that will have anything to do with any public funds or public funding will certainly meet that threshold of transparency.

One of Branstad’s key campaign promises is to create 200,000 jobs throughout the next five years. Durham acknowledged after today’s press conference that the goal is a tall order.

“I think it is a stretch goal but like I said will go to work every single day knowing that is the goal before us,” Durham said.

Iowa Citizens for Community Improvement criticized Branstad’s appointment of Durham today. Their statement is after the jump.

Governor-elect Terry Branstad announced yesterday that David Roederer will serve as his budget director, in charge of the state’s Department of Management. Roederer has been part of Branstad’s “inner circle” for decades. The Des Moines Register’s Thomas Beaumont wrote in September,

Roederer, a lobbyist from Johnston, is a multi-faceted troubleshooter, a role he carved out serving in several key posts for Branstad, including chief of staff and campaign manager, during a difficult stretch of the administration.

A serious problem-solver with the ability to bring people together, Roederer is often at work behind the scenes on key campaign issues and has worked on presidential and congressional campaigns since Branstad left office.

Roederer was a key sounding board for Branstad in June as the Republican nominee evaluated a list of prospects for his lieutenant governor running mate.

Jeff Boeyink will be Branstad’s chief of staff in the new administration. Boeyink spent many years working for Iowans for Tax Relief. He served as the Republican Party of Iowa’s executive director for a few months in 2009, but left that position to manage Branstad’s gubernatorial campaign.

Tim Albrecht, who handled communications for the Branstad campaign, will be communications director for the new administration. Since September, Albrecht has been running the right-wing news aggregator The Bean Walker in addition to dealing with the media on behalf of Branstad. No word on how long he plans to combine those jobs.

I’ve been waiting to see what position Branstad would give to Jim “Burn the Boats” Gibbons. He lost to Brad Zaun in the third Congressional district primary but had major donors and supporters who are also close to the incoming governor. Yesterday Matt Schultz announced that Gibbons will chair his secretary of state transition team, “advising on issues and personnel decisions related to the business services division of the office.” Maybe Schultz will give Gibbons a senior staff position. Incidentally, Story County Auditor Mary Mosiman will advice Schultz “on issues and personnel decisions related to the elections division.”

UPDATE: Todd Dorman cracks a few jokes about Branstad taking his wife Chris on a “much-deserved” 10-day vacation in France. I don’t begrudge them their trip, but can you imagine what conservatives would say if a newly-elected Democrat took off for Europe?