Jason Clayworth,

jclayworth@dmreg.com;

Managers responsible for a string of state government controversies won’t be held responsible under an Iowa taxpayer protection law because they didn’t go over budget, even though some of their actions were “ill-advised and wrong,” Gov. Terry Branstad’s administration said.

The administration contends the law — which says any official who violated it is personally liable to reimburse the state — doesn’t apply because taxpayer expenses involved in the scandals don’t meet both conditions: that they be over budget and misspent.

But multiple legal critics contend the governor’s reading of the law is inaccurate, flouts fiscal responsibility and disregards the legislative branch’s key budgetary function.

“The law is designed to protect the people,” said Jonathan Rosenbloom, a Drake University law professor whose expertise is state and local government. “The misallocation that is potentially happening in some of these cases is really a violation of the people’s trust.

“This goes beyond a legal argument. This is about moral protection that taxpayers have against this stuff.”

The controversies include:

• At least one $6,500-payment to keep a former employee from speaking about a secret settlement.

• Three political appointees of the Iowa Secretary of State allowed to work from home for up to 90 days after their positions were eliminated, without any evidence that they performed any work.

• Payments of employee termination settlement agreements using accounts that were intended to pay for things like efforts to make state buildings more energy efficient.

Law rarely enforced

An 81-year-old law gives the Iowa Department of Management the authority to investigate whether government officials misspent state money. The civil violations — enforced by the Iowa Attorney General — can force officials who violated the law to reimburse the state.

When government employees are criminally charged for misspending public money, they are frequently required to repay it as part of criminal restitution. This law, which Attorney General spokesman Geoff Greenwood said has not been used in decades, is based on civil actions. If used, it would hold both current and former managers — even if they weren’t criminally prosecuted — responsible.

The Des Moines Register last week inquired about the law after James Larew, a former attorney for Gov. Chet Culver, noted the past administration warned multiple state managers that failure to appropriately spend money could result in them reimbursing taxpayer money out of their own pockets.

Questions posed to Iowa Department of Management Director Dave Roederer were answered by the governor’s spokesman, Jimmy Centers. He said the Branstad administration doesn’t believe the law applies to any of the more than $500,000 in costs of secret settlements since the portions of the budget used to pay them did not go over budget.

Since March 16, the Register has uncovered more than 100 settlements given to former government employees that weren’t submitted to the Iowa Appeal Board, which provides public oversight into the majority of the state’s legal settlements. Of those settlements, at least 21 have some form of confidentiality, the Register found.

Records published by the Register — which showed a hush money payment of $6,500 to former state employee Carol Frank — led to the April 8 firing of Mike Carroll, the director of the Iowa Department of Administrative Services.

Centers characterized that payment as “ill-advised and wrong,” but he maintained the law holding managers responsible doesn’t apply since the DAS never went over budget. He didn’t directly answer questions about whether managers who approved such payments could or would be held responsible for returning the money in any other way.

“The departments and agencies didn’t exceed their appropriation,” Centers said.

Centers also said the management department won’t provide oversight of how Secretary of State Matt Schultz spent state money because he’s a separately elected official out of their purview.

Settlements came from other accounts

Iowa law — section 8.38 — says no department or manager shall spend money or approve claims in excess of budget appropriations. But it also includes a clause that says managers cannot spend money for any other purpose outside of that designated by the legislature.

Rosenbloom and Larew said the clause is written in such a way that it stands on its own and is not dependent upon overspending.

“That would be a very creative interpretation of the statute which, if true, could invite misuse of appropriations,” Larew said of Branstad’s reading that both a misappropriation and overspending must occur before a state manager is held responsible. “I can tell you, no Iowa legislator would ever agree to even one penny being used for hush money.”

Rosenbloom also noted that Iowa law outlines a process for department officials to seek approval from the governor and to notify the legislature prior to spending money in ways not authorized.

Those notifications never occurred for secret settlement payments. Some were paid from accounts designated for other functions like construction management costs, general operations and government building energy efficient efforts, records provided from the DAS show.

Multiple reviews or investigations are underway in the controversies and could lead to government accountability.

The Senate Government Oversight Committee and state auditor are working on the cases. And it’s possible the law could be cited or enforced as a result of their findings.

Unknown consequences

Mary Mosiman, the state auditor, last week provided the Register with a link to an Iowa administrative code on the “performance of duty” requiring that state employees “devote their full time, attention and efforts” to their assigned duties.

But it remained unclear what, if any, consequences that managers or employees who violate that administrative rule might face. Mosiman said she couldn’t speak about the consequences, and the DAS has not yet answered questions.

Mosiman declined to answer questions about how the administrative code she cited — or the law holding managers personally accountable — relates to the ongoing questions of misappropriated taxpayer money.

“My office will be reviewing the settlements. Our review will look at the facts, and follow applicable law pertinent to the facts,” Mosiman said. “It is not appropriate for me to comment on any of our work details until a report is completed and made public, so I will not be able to respond.”

Sen. Janet Petersen, chairwoman of the Senate oversight committee, said the reluctance of the management department to even consider the law holding managers personally responsible raises further questions about the Branstad administration’s commitment to accountability.

“The Legislature is not giving department heads a checkbook they can use at their discretion without having some accountability,” Petersen said. “We have systemic issues going on in department after department, agency after agency and we have a governor who isn’t interested in fixing the problem.”

THE LAW: Section 8.38, ‘Misuse of appropriations’

No state department, institution, or agency, or any board member, commissioner, director, manager, or other person connected with any such department, institution, or agency, shall expend funds

or approve claims in excess of the appropriations made thereto, nor expend funds

for any purpose other than that for which the money was appropriated, except as otherwise provided by law.

A violation of the foregoing provision shall make any person violating same, or consenting to the violation

of same liable to the state

for such sum so expended together with interest and costs, which shall be recoverable in an action to

be instituted by the attorney general for the use of the state, which action may be brought in any county of

the state.