State Auditor Rob Sand released an audit report Tuesday that says the Iowa Judicial Branch distributed $27.6 million of court debt collections to the wrong state fund over four years, shorting other state and local funds in the process.
The problem was caused by computer programming errors at the judicial branch. Some Republican officials have accused Sand, the only statewide elected Democrat, of failing to address the financial irregularities when his office was notified of a potential problem in 2022.
The claim that we didn’t follow up is just not true.State Auditor Rob Sand
Sand said his office has been in contact with judicial branch officials about the programming errors since that time, and was waiting for the judicial branch to provide final numbers that could be included in the audit for fiscal year 2023. He accused Republican officials of “making stuff up” about his office, and said they should apologize to his staff.
“The claim that we didn’t follow up is just not true,” Sand said. “We have remained actively engaged with the judicial branch. We worked with the judicial branch in settling on a plan to hire computer coding experts to address this issue, and duplicating that again obviously would have been a waste of tax money.”
Judicial branch says it has fixed the IT errors
The audit report includes a statement from the Iowa Judicial Branch, which says officials believe they have fixed the programming errors that sent $27.6 million of court debt collections — about 4.68% of collections from fiscal years 2021-2024 — to the wrong funds and shorted state and local funds by the same amount.
The biggest financial impacts were to the Road Use Tax Fund, which was shorted more than $10 million, and the Victim Compensation Fund, which was shorted more than $7 million.
The judicial branch said it made programming changes on Nov. 22 that will go through a third-party review to make sure they are correctly distributing funds in compliance with Iowa law.
The judicial branch also stated it has corrected financial distributions made since July 1, 2024, which was the beginning of the current fiscal year. But they are not able to fix funding mistakes from past fiscal years without action from the Legislature.
“We are interested and willing to work with all court debt stakeholders to correct all misallocations from FY21 through FY24,” the judicial branch response in the audit report states.
Sand said the numbers presented in the audit report, which his office received Oct. 23, represent the judicial branch’s final numbers of how much various accounts have been overfunded and underfunded.
“Now that we know that, the Legislature can make those adjustments,” Sand said. “But there was no way that we could have done that prior to the judicial branch actually providing those numbers.”
Sand’s office is also set to review the judicial branch’s calculations to ensure the numbers presented in Tuesday’s report are accurate.
GOP officials want more scrutiny of misallocated funds
Iowa Department of Management Director Kraig Paulsen continued to criticize Sand’s handling of the matter Tuesday after the audit was released. He said he was not satisfied with the audit report, and that Sand’s office would need to verify and document the judicial branch’s calculations in the follow-up review.
This clearly is something that we as a state government enterprise have not handled as good as it should have been handled.Kraig Paulsen, director of the Iowa Department of Management
Paulsen said lawmakers should investigate the matter, and Iowans deserve an apology.
“This clearly is something that we as a state government enterprise have not handled as good as it should have been handled, nor do I think we met their expectations,” he said. “And I think in particular…they should have been notified sooner, and we should have been in finding out what was right and what was wrong sooner.”
Paulsen disagreed with Sand’s assertion that the auditor’s office was required by state law to keep the information it received about financial irregularities in the judicial branch confidential. He also pushed back on Sand’s claim that the Department of Management was first to discover the problem.
Sand provided an email from a DOM employee dated July 26, 2022, that raised questions about a drop in revenue in the Road Use Tax Fund. But Paulsen said while his office saw a change in that fund, they did not understand the magnitude of the problem or have access to the information that would allow them to find the problem.
House Speaker Pat Grassley, R-New Hartford, has also criticized Sand’s response to the misallocated funds.
Grassley’s spokesperson, Melissa Saitz, said in a statement that it took scrutiny from Republican lawmakers and the executive branch for Sand to release audit reports that mention the problem.
“This report, however, far from answers all our questions,” she said. “Iowa House Republicans just learned about this issue in September and are still working to understand the full implications. We look forward to working this session to get our questions answered and this issue rectified.”
