Exclusive: Other agencies covered $900K in governor's office costs

Governor Kim Reynolds’ office was able to spend nearly 40 percent more than its $2.3 million budget appropriation during the last fiscal year, mostly by shifting personnel costs onto other state agencies.

Documents Bleeding Heartland obtained through public records requests show that eight state agencies covered $812,420.83 in salaries and benefits for nine employees in the governor’s office from July 1, 2020 through June 30, 2021. In addition, the Office for State-Federal Relations in Washington, DC remained understaffed, as it has been throughout Reynolds’ tenure. The vacant position should allow roughly $85,000 in unspent funds to be used to balance the rest of the governor’s office budget, as happened last year.

The governor’s communications director Pat Garrett did not respond to four inquiries over the past two weeks related to the office budget. But records indicate that unlike in 2020, federal COVID-19 relief funds will not be tapped to cover salaries for Reynolds’ permanent staffers in fiscal year 2021.

For many years, over several administrations, other state agencies have paid a portion of salaries for governor’s office employees who assist with that agency’s work. Since Reynolds became governor, the practice has greatly expanded. Chief of staff Sara Craig Gongol signed salary-sharing agreements with three state agencies for fiscal year 2020, which led to transfers totaling $294,700 from those agencies to cover much of the compensation for three governor’s office employees.

This summer, Craig Gongol signed memorandums of understanding with seven agencies to cover all or part of salaries and benefits for eight people on Reynolds’ staff during the last fiscal year. Invoices issued in early August show those agencies transferred the following amounts to the governor’s office:

$117,013.61 from the Iowa Department of Public Health to cover 100 percent of Elizabeth Matney’s salary and benefits from July 1, 2020 through February 18, 2021, when salary records show she stopped working in the governor’s office. Since June, Matney has served as Iowa Medicaid director in the Department of Human Services.
$113,752.38 from the Iowa Department of Revenue to cover 75 percent of Joel Anderson’s salary and benefits during fiscal year 2021
$102,668.43 from the Iowa Department of Education to cover 100 percent of Molly Foley’s salary and benefits during fiscal year 2021 (Reynolds’ education advisor now goes by her married name, Molly Severn)
$96,329.63 from the Iowa Department of Natural Resources to cover 75 percent of Jacob Swanson’s salary and benefits during fiscal year 2021
$69,611.47 from the Iowa Department of Human Resources to cover 100 percent of Meaghan O’Brien’s salary and benefits during fiscal year 2021
$54,848.09 from Iowa Workforce Development to cover 50 percent of Logan Shine’s salary and benefits during fiscal year 2021
$59,769.10 from the Iowa Economic Development Authority to cover 100 percent of Daniel Wolter’s salary and benefits from July 1, 2020 through November 5, when salary records show he left the governor’s office
$91,435.05 from the Iowa Economic Development Authority to cover 50 percent of Heather Nahas’ salary and benefits during fiscal year 2021

When the governor asked legislators for an additional $200,000 in 2019 (a 9.5 percent increase in the general office budget), Craig Gongol told key lawmakers the extra money would support new advisers on health and tax policy. Republican lawmakers approved the request, increasing the governor’s appropriation from $2,103,954 in fiscal year 2019 to $2,303,954 for fiscal year 2020. That spending level was carried over for the fiscal year that ended June 30, and lawmakers approved a budget of $2,315,344 for the current year, which began July 1.

Reynolds hired Matney as health policy adviser and Anderson for tax policy during the summer of 2019. However, the departments of revenue and human services paid 100 percent of Matney’s and Anderson’s compensation for about two-thirds of the 2020 fiscal year, and federal COVID-19 relief funds covered much of their salary and benefits for the remainder. And under agreements signed this summer, other state agencies covered the entirety of Matney’s compensation and 75 percent of Anderson’s for fiscal year 2021.

Whether or not Craig Gongol ever intended to spend the extra $200,000 as she promised, one fact is indisputable: the governor’s office did not need a budget increase to bring on health and tax advisers.

I sought clarification from the Iowa Economic Development Authority after learning the agency covered half of last year’s salary and benefits for Nahas. To my knowledge, Reynolds’ public relations manager has no economic development background (unlike Wolter, who was hired in 2019 to work on that policy area). Agency spokesperson Staci Hupp Ballard said in an August 30 email, “One of IEDA’s roles is to promote Iowa as the state to visit, live, work and do business, and we receive strategic support from Heather Nahas as part of those efforts.”

Staff for the various agencies confirmed state funds were used to pay Anderson, O’Brien, Swanson, Shine, Wolter, and Nahas. I am awaiting clarification from the other agencies. Records previously provided by the Iowa Department of Public Health show Matney was deeply involved in the pandemic response, so her compensation would clearly be an allowable use of federal COVID-19 relief funds. I have less information about the work Foley was doing for the Department of Education. UPDATE: A spokesperson for the department said on September 9 that state funds were used to pay Foley.

“REIMBURSEMENT” FOR PAUL TROMBINO’S WORK: $106,993.07

Reynolds named her chief operating officer Paul Trombino III to serve concurrently as interim director of the Iowa Department of Administrative Services on March 7, 2020. That agency paid 100 percent of Trombino’s salary and benefits for the remainder of the 2020 fiscal year, and the arrangement continued until the governor appointed Adam Steen in January to lead the department handling human resources, payroll, and procurement for state government.

State financial records show that in February, the Department of Administrative Services transferred $106,993.07 to the governor’s office as “reimbursement” for interim director Trombino’s salary and benefits from July 1, 2020 through January 10, 2021.

Reynolds put Trombino in charge of the Department of Homeland Security and Emergency Management in late January. Salary records show that agency covered his compensation from then until he left state government in May for a municipal job in Colorado.

UNDERSTAFFED WASHINGTON OFFICE FREES UP FUNDS

Iowa’s Office for State-Federal Relations functions as the state’s lobbying arm in Washington, DC. Under state law, it is an independent agency, and it is funded through transfers from other state agencies, rather than through a general fund appropriation in each year’s budget. However, its revenues and spending are considered part of the governor’s office on state financial documents.

According to the Iowa Department of Management, the funding formula supporting the Office for State-Federal Relations’ annual budget of $299,782 has not changed since 2017. Agencies are charged based on factors such as the amount of federal funds they receive. Here’s the full list of state agency transfers during fiscal year 2021. That document provides agency code numbers rather than names; this page lists each agency’s code.

Nearly 90 percent of the revenue for Iowa’s DC office comes from the dozen state agencies that contribute the most, led by the Departments of Human Services ($81,252), Transportation ($33,101), Education ($22,166), Workforce Development ($21,778), Economic Development ($20,290), and Public Health ($18,325).

Records obtained from the Department of Administrative Services show the DC office employed two full-time staff throughout Terry Branstad’s second stint as governor, as had been the case during the Vilsack and Culver administrations. Shortly before Reynolds became governor in the spring of 2017, Stephanie Groen was promoted from the second position to Iowa’s top liaison with the federal government.

Throughout the next four fiscal years, Groen was the only employee in the Office for State-Federal Relations. (This summer, she became deputy chief of staff and policy director in the governor’s office, and Meaghan O’Brien became federal liaison.)

Department of Management staff told me last year the DC office “historically has included two full time staff,” adding that “The state has continued to maintain a consistent revenue stream to allow flexibility to fill the support position as needed.” But during the past four years, the Reynolds administration never attempted to hire a second staffer in that office. The Department of Administrative Services confirmed there have been no job listings for the position.

Last year, the unfilled position produced a surplus of $84,735 for the Office for State-Federal Relations, which was used to balance the overall governor’s office budget. Final financial reports for fiscal year 2021 (which ended June 30) are not yet available, because the state closes the books on September 30. While the precise amount is not known, the office is guaranteed to run another surplus, since Groen’s salary (the largest expenditure) increased by only a few thousand dollars from fiscal year 2020 to 2021, state salary records show.

State agencies are arguably being overcharged for work done on their behalf with federal officials, so that money not spent in Washington can cover governor’s office expenses in Des Moines.

GOVERNOR’S OFFICE NOT TAPPING CARES ACT FUNDS THIS YEAR

Federal funds from the Coronavirus Aid, Relief and Economic Security (CARES) Act covered $448,448.86 in governor’s staff salaries and benefits during fiscal year 2020. In a unique payment scheme, the CARES Act money went first to the Homeland Security department, which hadn’t requested it. Days later, the governor’s office invoiced Homeland Security for the salary payments.

Even now, it’s difficult for members of the public to follow the money trail, because the state’s pandemic-related databases show only that the Homeland Security agency spent $448,449 on “State Government COVID Staffing” or an “intra-state transfer.”

I’ve been keeping an eye on the summary report for Iowa’s Coronavirus Relief Fund spending, because Reynolds authorized $1 million to Homeland Security last year for “COVID Staffing.” I wondered whether the remaining $551,551 might be used to pay the governor’s staff again.

Garrett didn’t respond to inquiries about federal COVID-19 relief funds for salaries in the governor’s office. But records provided by the Department of Management show Homeland Security returned those unspent CARES Act funds to the Coronavirus Relief Fund in April, bringing the balance down to zero in its “State Government COVID Staffing” account. That account seems to have been created with one purpose in mind: to obscure the ultimate beneficiary of CARES Act dollars designated for the governor’s office.

FINANCING OF TECH UPGRADES UNCLEAR

As Bleeding Heartland reported exclusively in March and July, the Office of Chief Information Officer paid for two major technology upgrades in the governor’s office late last year. Migrating the employees’ computers from Gmail and Google Drive to Microsoft Office 365 software cost $39,512. Purchasing and installing new audio and video equipment for the Robert Ray Conference Room cost $67,543.48.

Records show OCIO requested and received approval to use CARES Act funds for both of those expenditures. Databases on pandemic-related spending show the agency paid vendors who carried out the software migration and the conference room upgrade from Iowa’s Coronavirus Relief Fund.

However, agency staff later told Bleeding Heartland those database entries had been “inaccurately coded to the federal CARES program,” which was “anticipated” to cover the expenses. OCIO said the governor’s office reimbursed the agency for the software migration but did not answer questions about which funding stream ultimately paid for the conference room improvements. OCIO may have covered that $67,543.48 expense; I’ll know when the state provides the fiscal year-end report for the governor’s office sometime in the coming weeks.

PATTERN CHARACTERIZED AS “SHELL GAME”

Republican State Senator Dennis Guth, who chairs the appropriations subcommittee that handles the governor’s office budget, did not respond to Bleeding Heartland’s inquiries about other agencies covering a growing number of salaries, including for positions that were supposed to be funded through the extra $200,000 appropriation in 2019. Guth’s counterpart in the Iowa House, State Representative John Landon, passed away in July.

State Representative Chris Hall, the ranking Democrat on the House Appropriations Committee, commented via email, “Here is another brick in the wall for Governor Reynolds’ lack of candor with the public. From huge bonuses for political appointees, to hiding COVID data, to diverting tax dollars for her own office, it explains why Reynolds was recently called the least transparent governor in Iowa’s history.” (Bleeding Heartland covered state agency directors’ undisclosed bonuses here.)

Referring to an amendment he offered in April, when the Iowa House debated the fiscal year 2022 administration and regulation budget bill, Hall said,

Last session, Iowa House Democrats offered a common sense proposal to require disclosure of taxpayer dollars being spent on staff salaries in the governor’s office. Reynolds and her GOP allies in the legislature refused. Since then, we have received information that other state agencies have covered almost $1 million of the Reynolds administration’s operating costs – with little indication of where the dollars went.
The only consistency we have found is a willingness by the governor to grow the costs of her office, while failing to tell Iowans they’re paying for it. Iowans deserve better, and they deserve to know how their hard-earned dollars have been spent.

State Senator Claire Celsi, the ranking Democrat on the Iowa Senate Government Oversight Committee as well as the relevant budget subcommittee, said via email she was “deeply disappointed, but not surprised, to hear about how many of the governor’s staff salaries are covered by other agencies.”

This trend in the governor’s office reveals her shell game. She requests that department heads submit flat budget requests year after year, even when that is impractical. Yet, at the same time, the governor’s office is adding many new staff members and pawning their salaries off on departments who are already unable to maintain proper staffing levels – or to give their loyal employees cost of living increases.
When Democrats on the Administration and Regulation subcommittee in the legislature last questioned the governor’s chief of staff about the governor’s budget, none of these sharing arrangements were disclosed. Now, I’m finding out the budget was close to a million dollars higher, when many departments haven’t had an increase in years.
Iowans deserve to know how the governor is funding her budget positions and it shouldn’t take a public records request from a reporter to locate these records. I am disturbed that the governor hid these payment arrangements from legislative oversight and from the public.

I will update this post as needed when state agencies provide additional documents related to the governor’s office spending.