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State of Iowa told no, you can’t use $21m coronavirus federal aid to help fund your $52m Workday roll-out

...even if your 18-year-old mainframe keeps getting flooded and falling over

In a warning to all those inclined towards budgetary imagination when finding funds for their next IT project, heed the lessons that are currently being learnt in a certain corner of the midwestern US.

The state of Iowa has been told it cannot pay for a Workday HR and finance roll-out with funds shifted from its $1.25bn Coronavirus Aid, Relief and Economic Security, or CARES Act.

Rob Sand, State of Iowa auditor, has written [PDF] to the Department of Management director Dave Roederer to point out that state governor Kim Reynolds’ decision to use $2m of coronavirus relief for its long-awaited finance and HR system upgrade is simply “not allowable”.

“The Governor has chosen to spend $21 million on Workday, an HR/accounting computer system intended to replace the state’s legacy mainframe system,” he said.

The state signed a contract with Workday in 2019, but in July, Reynolds said $91m of Iowa’s $1.25bn CARES Act funds would go to the CIO for upgrades, including the Workday project, according to local news sources.

The Governor’s Office had tried to justify the fiscal manoeuvre by claiming the WorkDay system would help the state “act quickly to assist essential government employees, giving them flexibility in a number of ways, such as requesting COVID-related hardship help, easier ways to request Family and Medical Leave Act leave types, and automate processes for donating leave, and borrowing leave.”

But the reasoning didn’t wash with the auditor.

“These expenditures are not 'due to the public health emergency.' The State signed a contract in 2019 for these expenditures prior to the emergence of COVID-19. The statement regarding how Workday affects state employees, a portion of whom are themselves working on the public health emergency, is essentially a restatement of the purpose of Workday in general, which did not change with the emergence of COVID19… Spending $21m on Workday is not an appropriate use of [Covid relief] funds. If the Governor does not redeploy these dollars to a lawful use, they will have to be repaid to the federal government. That will result in a $21M loss for Iowa taxpayers,” the letter said.

Richard Delmar, deputy inspector general for the US Department of the Treasury, agreed.

According to the Gazette news site, he also wrote to Roederer and said: “While the new and modern Workday system may provide additional functionality, these upgrades are not necessary to address the public health emergency and were already planned before the COVID-19 pandemic outbreak.”

Regardless of the COVID-19 pandemic, the need for HR and finance new systems could scarcely be more pressing.

According to the State of Iowa's Enterprise Resource Planning Systems Optimization Plan, the current finance system, or “Integrated Information for Iowa” was developed on a mainframe CGI in 2002 and was last upgraded in 2012. It is no-longer supported by the vendor due to the age of the system and the fact basic support ended September 2020.

Meanwhile, the HR system HRIS was developed in the 1980s and was written in 1950s-era COBOL. Difficulty in recruiting and retaining personnel with historic code experience was cited as a problem in maintaining the system.

To make matters worse, the mainframe housed in the Hoover Building's State Data Center flooded in 2018 and 2019. In June 2019, the mainframe shut down and the finance system could not be moved to a backup mainframe offsite. IT teams have since installed back-up batteries “to stabilize [the] system.”

The plan put the cost of the Workday upgrade at $52.5m over five years, including software subscriptions and staff time, which makes it about the same as maintaining the current system, but with more functionality to “improve operational performance” and “enable data-driven decisions,” the plan stated.

The upgrade may well be urgent, but it looks like the state will have to find something other than federal emergency aid to pay for it. ®

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