The state of Iowa is returning $21 million of federal coronavirus aid money it planned to spend on upgrading state information technology systems, Iowa Gov. Kim Reynolds said Monday (12/14).

Reynolds said in a statement she has directed the Iowa Department of Management to return the money to the state’s virus relief fund by Friday.

The funds were initially allocated for payments related to the state’s contract with Workday, a cloud-based human resources, finance, and planning system being implemented to modernize the state’s IT infrastructure. Of the allocation, $4.45 million had already been spent.

Reynolds said U.S. Treasury officials initially assured the state the Workday project was an allowable expense but has now determined the payments were not allowed expenditures under the federal Coronavirus Aid, Relief, and Economic Security Act.

Reynolds said the state’s outdated IT systems remain a critical need so the project will proceed as planned and she will seek supplemental funding from the Iowa Legislature to pay for the project.

Reynolds said the state has spent all but $47.3 million of the $1.25 billion Iowa received from the federal virus relief fund, which must be allocated by Dec. 30. She confirmed the money will be allocated by the deadline but said an extended deadline would be helpful to “allow time to use the funds to create additional programs and support other needs among Iowans.”