Senate sends state auditor limitations to governor’s desk

DES MOINES — Iowa’s taxpayer watchdog office would be limited in its ability to request certain documents under a bill headed to Gov. Kim Reynolds’ desk to be signed into law.

The Iowa Senate gave the final passage Wednesday to Senate File 478, a bill that defines what a state auditor could request as part of an audit and when an audit begins, and requires disputes between the auditor and state agencies to be settled by an arbitration board.

The bill passed along party lines, 33-16, with Democrats opposed.

State Auditor Rob Sand, Iowa’s sole elected statewide Democrat, said it is the “worst pro-corruption bill in history” and an erosion of the balance of power.

“The bill is the greatest pro-corruption bill and the worst perversion of checks and balances in Iowa’s history because it lets state government hide documents from auditors, and ends judicial review of such decisions,” Sand said in a statement after the bill’s passage. “To eliminate checks and balances on power is an attack on democracy and an invitation to corruption.”

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The bill has also drawn significant condemnation from nonpartisan and bipartisan auditors organizations and CPA organizations, who say it would hamper the state auditor’s ability to prevent fraud and misuse of taxpayer funds.

But Republican Sen. Mike Bousselot of Ankeny said Sand has repeatedly overstepped his bounds and requested unnecessary information.

“This bill … gives clearly much-needed guidance to the auditor of state who has been overreaching, and gives common-sense policy,” Bousselot said.

The bill would add to the list of documents generally not available to the auditor, blocking the auditor from accessing criminal identification files, student records, medical records, police investigation records and any other information that someone would reasonably expect to be kept private, among others.

Under an amendment added by the Iowa House, the auditor would be able to access those documents if it is necessary for generally accepted standards, or to comply with any other state or federal regulation or if the auditor is investigating alleged or suspected embezzlement or theft.

The bill would also require disputes between any constitutional offices — including the auditor — departments, commissions or boards of the state government be decided by an arbitration board, rather than in the courts. The three-member board would consist of members appointed by each of the disputing parties and a member appointed by the governor’s office.

In an open letter, National State Auditors Association President John Geragosian said the arbitration board setup “clearly favors the audited agency rather than having an objective third party decide the matter.”

“Access to records necessary to conduct an independent audit is essential for the proper oversight of public funds,” he wrote. “Therefore, we respectfully request that you eliminate the limitations in Iowa Senate File 478 and any subsequent amendment.”

Former U.S. Comptroller General David Walker and the Institute of Internal Auditors also took issue with the amended bill, saying it still limits the independence of the auditor.

Democrats said the bill was a partisan power grab and would make government corruption harder to identify.

“This bill is not about privacy,” said Sen. Janet Petersen, D-Des Moines. “This is pro-embezzler, this is pro-corruption, this is pro-crony.”

Bousselot this week floated the idea of entirely removing the auditor’s subpoena power, but that was not added to the bill.

Last month, the Iowa Supreme Court ruled the state auditor does not have authority to investigate an insurance risk pool that provides insurance coverage to taxpayer-funded government entities. Sand filed a subpoena asking for records regarding out-of-state meetings of the pool’s directors, which Bousselot pointed to as an illegal abuse of Sand’s subpoena power.

“The watchdog still has teeth,” Bousselot said. “It’s just making sure those teeth aren’t getting sank into something they shouldn’t be, which is Iowans’ most personal private information.”