In March, Governor Kim Reynolds hailed passage of her state government reorganization plan, saying it would be “an important step” to “reduce the size and cost of government.”

The governor’s commitment to making government smaller and less costly hasn’t extended to her own staff.

In the fiscal year that ended June 30, other agencies spent more than $1 million to cover operating costs in the governor’s office, documents Bleeding Heartland obtained through public records requests show. Those funds allowed the governor’s office to spend nearly 50 percent more than its budget appropriation of $2.3 million for fiscal year 2023.

Reynolds’ chief of staff Taryn Frideres told state lawmakers in February that increasing the governor’s office allocation for the current fiscal year by about $500,000 (a 21 percent bump) would be “more transparent” and ensure that “our actual appropriation is closer to our expenses, so that we can budget in a more straightforward way.”

But records Bleeding Heartland reviewed indicate that the $2.8 million general fund appropriation Republicans approved for fiscal year 2024 will fall far short of what the governor’s office will spend on staff salaries and other expenses.

The U.S. Treasury Department’s Office of Inspector General is reviewing documentation provided to justify Governor Kim Reynolds’ use of federal COVID-19 relief funds to compensate staff in her office, Deputy Inspector General Richard Delmar told Bleeding Heartland on March 14.

The State Auditor’s office concluded in November and reaffirmed this month that Reynolds used $448,449 in CARES Act funds to pay part of the salaries and benefits of 21 permanent staffers between March and June 2020 in order to “cover a budget shortfall that was not a result of the pandemic.” State Auditor Rob Sand called on Reynolds to return the money to Iowa’s Coronavirus Relief Fund before the end of 2021. The governor’s office has insisted its use of COVID-19 relief funds for staff salaries was justified.

When the State Auditor’s office published its findings in November, Delmar told Bleeding Heartland his office “has not initiated an audit of the Governor’s Office salaries and awaits resolution of this matter between the Iowa State Auditor and the Governor’s Office.”

Asked this week about the impasse between Reynolds and state auditors, Delmar confirmed via email, “We have requested documentation of the uses from the State Auditor’s Office and are in the process of reviewing it.”

For the second straight year, the state of Iowa missed a deadline for releasing a detailed report on state finances. Officials publicly acknowledged the delay last week but have not explained why the Annual Comprehensive Financial Report for fiscal year 2021 is not complete.

Staff at the Iowa Department of Administrative Services, which compiles this report, have not responded to five inquiries from Bleeding Heartland about the matter over the past two weeks. Staff at the Iowa Department of Management, which prepared a public notice about the late report, likewise ignored three attempts to clarify the source of the problem.

Governor Kim Reynolds has decided to appoint Kraig Paulsen to lead the Iowa Department of Management, according to a document posted on the state budget agency’s website September 27. The governor’s office has not yet announced the decision, but the agenda for the October 4 meeting of the State Appeal Board indicates that Paulsen will be introduced as “Director of the Department of Management.”

The State Appeal Board meets monthly to approve or reject claims against the state or a state employee. Its three members are the Department of Management director, the state treasurer, and the state auditor.

Paulsen has served as Iowa Department of Revenue director since February 2019. He previously led a supply chain initiative at Iowa State University, a position that was created for him on a fast track, bypassing the university’s usual open search process. Before working at ISU, Paulsen represented part of Linn County in the Iowa House for fourteen years, serving as House speaker from 2011 to 2015.

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.

In an unusual move, Governor Kim Reynolds is allowing two state agency directors she appointed early this year to continue serving through next year’s legislative session, even though they lacked the votes to be confirmed by the Iowa Senate.

Reynolds withdrew the nominations of Department of Management Director Michael Bousselot and Department of Administrative Services Director Adam Steen shortly before state lawmakers adjourned for the year in May. Days later, she rejected the directors’ resignations, saying she would resubmit their names to the Senate in 2022, documents obtained through public records requests show.

The governor’s office has not publicly announced Reynolds’ decision to hold over Bousselot and Steen and did not respond to Bleeding Heartland’s inquiries.

The Department of Management handles state budget planning as well as disbursements from Iowa’s general fund and various other funds. The Department of Administrative Services handles human resources, payroll, and procurement of goods and services for state government.

Federal funds used to cover salaries and benefits for Governor Kim Reynolds’ staffers were routed through the Iowa Department of Homeland Security and Emergency Management, rather than going directly to the governor’s office.

Because of the unique arrangement, state agencies’ databases and published reports on expenditures from the Coronavirus Aid, Relief and Economic Security (CARES) Act do not reveal that any funding supported the governor’s office. Instead, some show allocations from Iowa’s Coronavirus Relief Fund to Homeland Security, from which $448,449 was spent on “COVID Staffing” or “State Government COVID Staffing.”

That’s the exact dollar amount Reynolds approved to pay permanent employees on her staff for part of their work during the last three and a half months of the 2020 fiscal year. Other agencies that had staff working on the pandemic response from the State Emergency Operations Center, such as the Iowa Department of Public Health, did not receive CARES Act funding through the same indirect route.

The governor’s communications director Pat Garrett and chief of staff Sara Craig Gongol did not respond to six inquiries over a three-week period about how these payments were made and recorded.