Fund Swapping investigation to begin later this month

CEDAR RAPIDS, Iowa - Yesterday, Iowa District 1 Representative Abby Finkenauer made a Labor Day announcement of an upcoming investigation that she said will help Iowans, specifically the state’s workers.

On these projects, the federal government gives money to states, and normally, the states would then transfer that money to cities and counties to pay for the projects. Then those projects are subject to federal requirements, including the Davis-Bacon Act, which determines workers’ wages on federal construction projects, and the Buy American Act, which sets an American-made preference on materials purchased for the project.

But with fund swapping, the state holds on to the federal money and instead gives state funds to the local governments, and those projects can avoid the federal requirements. Finkenauer said this means workers may not be making a fair wage and that projects like bridges may be unsafe because they aren’t required to be made with “high-quality” American materials.

Fund swapping has been legal in Iowa since 2017 when House File 203 was passed by the state legislature.

This new investigation will look into the effect federal fund swapping has had on infrastructure projects, according to Finkenauer.

Finkenauer said the GAO will commence its investigation in September and should release its preliminary findings by the end of the year.

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