Iowa courts implement new program to correct error that misallocated $27.5M

DES MOINES — A coding error that caused Iowa courts to misallocate over $27.5 million in court fees has been addressed and a new program was implemented last month, Iowa Judicial Branch officials have said.

In a report released Tuesday by the State Auditor’s Office, the Iowa Judicial Branch said on Nov. 22 the courts implemented new programming to correct previous errors that led to the misallocations. The changes will ensure the future distribution of court fees works as required by state law, the Judicial Branch said in the report.

In Iowa, funds paid to the courts in the form of fines, fees and penalties in criminal cases are distributed to various sources, including state funds for victim compensation, emergency services, road infrastructure, county attorneys and the state’s general fund.

Under the state’s distribution system, clerks of courts enter court fees into a coding program that is supposed to channel those funds to the proper source. But the Iowa Judicial Branch in October revealed that coding errors sent more than $27.5 million to the state’s general fund instead of some of those other state funds and programs. The courts had been investigating the issue for more than two years.

According to the Judicial Branch’s investigation, more than $10.4 million should have gone to the state fund that supports infrastructure work on roads and bridges, $7.2 million should have gone to a state program that helps victims of violent crimes with certain expenses, and $4 million should have gone to a fund that supports juvenile detention homes.

The Iowa general fund, where most of the allocations were sent by error, currently has a $2 billion surplus, according to the state’s nonpartisan Legislative Services Agency.

According to the Iowa Judicial Branch, the programming issues arose in the 2021 state budget year after lawmakers changed the court fees distribution system during the 2020 and 2021 legislative sessions.

The new laws in consecutive years required programming changes to the distribution system. A report from the National Center for State Courts said the state law changes created confusion in implementing the new coding.

In the report Tuesday, the State Auditor Rob Sand’s office recommends the Judicial Branch complete necessary programming changes to ensure the proper allocation of court debt. The report also recommends the Judicial Branch work with Iowa Department of Management and the Iowa Legislature to address the erroneous allocations.

Sand’s report also recommends that future funding changes made by the Iowa Legislature not take effect “until state branches and agencies have sufficient time to accurately and carefully make all necessary changes.”

A Judicial Branch spokesman said Tuesday that the courts cooperated fully with the auditor’s office and does not dispute any of its findings.

The Judicial Branch also in its report response said it is “interested and willing to work with all court debt stakeholders” to correct the earlier misallocations. While the new programming was designed to fix future fee distribution and the courts have applied fixes retroactively to the start of the state budget year on July 1, erroneous distribution from previous years requires action by the Iowa Legislature.

State officials hurl accusations

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The issue of those misallocated court fees has sparked a series of accusations between some of Iowa’s state agency heads and one legislative leader that started in October and continued Tuesday.

Sand, a Democrat, has defended his office’s work on the issue and accused other state leaders of playing politics in their criticism of his office.

Iowa Department of Management Director Kraig Paulsen, Iowa House Speaker Pat Grassley and Iowa Attorney General Brenna Bird — all Republicans — have accused Sand and his office of not acting sooner and not doing all his office should to address the issue.

The latest round of allegations started Tuesday when Sand held a news conference highlighting his office’s report. Sand said the report shows that while others “have been pushing politics as usual” and wasting taxpayers’ money, his office has been doing its job.

Sand called on those who have criticized his office to apologize to the accountants who work there, and said he is proud of their work.

“Sometimes you got to laugh so you don’t cry. I mean this stuff is just so ridiculous,” Sand said. “If you have to make stuff up to attack the person that’s holding you accountable, the office that’s holding you accountable, then that office must be doing a pretty good job.”

A statement from Melissa Saitz, the spokeswoman for Grassley and Iowa House Republicans, criticized Sand for not compiling a report sooner and not including more information in it.

“We’re glad that Auditor Sand took a break from his Twitter account to do the work the people of Iowa elected him to do,” Saitz said. “It’s concerning that it took scrutiny from Republicans in the Legislature and executive branch for the Auditor to release the audit reports and even briefly mention the misallocation of millions of public funds by the Judicial Branch.

“This report, however, far from answers all our questions. 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.”

Bird, whose office manages the Victims Compensation Fund that has been shorted $7.2 million, pushed back on Sand’s assertion that previous criticism of his office was unwarranted because none of the programs that were shorted ever ran out of funding.

“Rob Sand blew it, and now he is lying to cover up his mess,” Bird said in a statement. “With the money State Auditor Sand’s failure cost crime victims, we would have been able to provide 3,600 domestic violence survivors and their kids apartments, for the first time in years, as a safe escape from a violent situation. No domestic violence victims should have to stay with their abuser because they cannot afford to leave. And our State Auditor owes Iowa crime victims an apology.”

The Victim Compensation Fund’s monthly balance never dipped below roughly $2.7 million during the time the fees were erroneously allocated, according to Sand’s report.

Paulsen told reporters Tuesday that he thinks Iowa taxpayers are owed an apology. He, too, said Sand’s office should have acted sooner and that its report should have gone deeper.

“This clearly is something that we as state government enterprise have not handled as good as it should have been handled, and nor do I think we met their expectations,” Paulsen said. “And I think in particular, as already laid out, we should have been notified sooner, and we should have been in finding out what was right and what was wrong sooner.”

Sand said the Auditor’s Office moved forward with its work as soon as it had sufficient information, which he said it did not have until the Judicial Branch released its information in October.

Comments: (515) 355-1300, erin.murphy@thegazette.com

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