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Iowa panel seeks audit of $27.5M in misdirected court fees
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DES MOINES — An Iowa legislative panel is recommending the state order an independent audit of more than $27.5 million in court fees that were misdirected by the Iowa Judicial Branch in recent years.
Republicans on the Iowa House Government Oversight Committee approved a “Majority Report” on Tuesday looking into the mishandling of fees by the Iowa Judicial Branch spanning four years and resulting in reduced funding for victim compensation, emergency services and road infrastructure.
The mishandling was made public in October 2024 when the Iowa Judicial Branch revealed that coding errors sent more than $27.5 million to the state’s general fund instead of the intended state funds and programs. The revelation sparked an investigation by state lawmakers and a political back-and-forth between elected officials.
Republican state Rep. Charley Thomson, of Charles City, who chairs the House Oversight Committee and spearheaded the “Majority Report,” criticized the judicial branch’s mishandling of the funds and Iowa State Auditor Rob Sand for failing to notify lawmakers about the issue in 2022.
Thomson said he wants assurance on where all of the fees went, the exact date when the mishandling began and whether any of the fees can be recovered.
“The people of Iowa would like to know that for sure that $25 million, at least, didn't leave the state and go into Aunt Millie's account,” Thompson told reporters after the committee meeting. “I have no reason to think that there's a particular malicious person who stole the money, but until we have traceability on the funds, I'm concerned about it.”
The report, approved by in a 6-4 party-line vote, recommended the Iowa Department of Administrative Services hire an independent accounting firm to audit all court debt collections and distributions for fiscal years 2016 through 2025.
It also recommended the state contract with an independent firm to oversee judicial branch court debt and collection going forward and require the same systems used to manage court debt funds to meet or exceed standards imposed on Iowa attorneys handling funds.
Democratic Rep. Larry McBurney, of Urbandale, said the report is "thorough" and agrees with most of the recommendations but expressed concern over the cost of hiring a third party to handle court debt collection.
“I don't see how we'd end up having to pay for that,” McBurney said. “For that reason, I feel like there needs to be more work done within the report.”
The report also recommends the Iowa Legislature pass legislation requiring immediate notification of the state auditor, the governor and legislative leadership whenever a state entity discovers a potential misallocation of funds over $100,000.
It also recommends that lawmakers consider additional oversight for Judicial Branch financial operations, including regular independent audits and mandatory reporting to the Legislature.
The investigation
According to an Iowa Judicial Branch investigation released in 2024, 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.
A report from the National Center for State Courts, commissioned by the Iowa Judicial Branch, said state law changes in 2020 and 2021 to the court fees distribution system caused confusion that led to programming errors, which led to the misdirection of funds.
The report was conducted in 2023 and made public in October 2024.
The Iowa Judicial Branch has taken responsibility for the misallocation.
“The judicial branch takes full responsibility for the misallocation and is committed to continuing to collaborate with the other two branches of government and other (affected) stakeholders to resolve this issue and to develop a path forward to improve and simplify court debt distribution,” Iowa Judicial Branch spokesperson Steve Davis said in a statement Tuesday.
“While we have not had an opportunity to fully review the report and comment on the recommendations, we appreciate that the report acknowledged there was no criminal intent or personal enrichment.”
During a hearing on the issue last year, the Judicial Branch asked lawmakers to simplify the state’s process of collecting and distributing court fees.
Sand faulted, his response
The report also accuses Sand, the only Democrat serving in statewide office in Iowa, who is also running for governor, and his office of not acting sooner and not doing all it should have to address the issue.
Thomson noted Sand’s office was alerted by the Department of Transportation in 2022 about a potential fee distribution error. Sand did not release an audit on the court fee misallocation until December 2024.
Sand has said that when first notified of the issue, he allowed the judicial branch to investigate the errors. He also has said the issue was a coding error, and that no one in his office has expertise in auditing computer coding.
“No money was lost, and no services were delayed. This is like the bank putting money meant for your checking account into your savings account,” Sand said. “That is what the Judiciary did. The Judicial Branch has taken full responsibility for its error.
“This report rehashes old, debunked lies in an election year and is the same politics that Iowans hate.”
Iowa House Democrats said Tuesday they will release a “Minority Report” on the issue Wednesday.
Erin Murphy of The Gazette contributed to this report.
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