The Iowa Judicial Branch improperly distributed $53 million in court debt due to an IT error

According to letters from the speaker of the Iowa House and the director of the Iowa Department of Management, the Iowa Department of Corrections has improperly distributed more than $53 million in collected court debt since 2021 due to an IT error.

House Speaker Pat Grassley and Iowa Department of Administration Director Kraig Paulsen, both Republicans, wrote to Democratic State Auditor Rob Sand urging him to investigate the Judiciary’s judicial debt collections and asking why he hasn’t already have done.

According to Paulsen’s letter, the improper distributions resulted in the state Victim Compensation Fund being cut by $3.7 million, the Juvenile Detention Fund being cut by $3.5 million, the DARE program being cut by $154,000 and the Road Use Tax Fund was cut by $10 million.

Paulsen’s letter noted that the total amount of the misallocation was due to improper overpayments of $26.6 million, as well as funds that were still underpaid by $26.6 million. It was not clear from the letters what that $26.6 million was used for if it did not go to the correct funds.

A Justice Department official said Tuesday that their communications director was out of town and that they would respond to intellectual property rights “as quickly as possible.”

Sand said Tuesday that the money had not left the state’s accounts.

Court Administrator Bob Gast said the judiciary has no plan to fix the problem, according to Paulsen’s letter.

After the Iowa Legislature made changes in 2020 and 2021 to how court fees and fines would be distributed among state programs, the judiciary programmed the changes into its IT system.

Grassley and Paulsen said they recently learned from court administrators that the judiciary discovered computer bugs in late 2021 that caused some of the money to be distributed incorrectly.

Grassley wrote that the judiciary’s attempts to fix the problem “resulted in additional problems” and the courts tried to get help from an outside provider but never informed him of the problem.

According to Paulsen’s letter, in 2022, the Iowa Department of Transportation notified Justice of financial irregularities in the collection and distribution of funds paid for traffic tickets, and Justice then retained services from the National Center for State Courts to review its debt collection practices.

In a letter to the DOT in September 2022, Gast said, “We have initiated a comprehensive review of court debt distribution policies, programs and practices.” We are committed to ensuring that we distribute court debt correctly and in a timely manner, as required is required by law.”

According to emails shared by Paulsen, the DOT also notified the state comptroller’s office in October 2022 about problems with the distribution of traffic ticket collections.

Paulsen said it appeared that Sand’s staff had failed to comply and that problems with the collection of court debts were not mentioned in the judiciary’s audit reports for the 2021 and 2022 fiscal years.

“It is unclear why the Judiciary’s internal controls were not tested and these issues were not resolved,” Paulsen wrote.

He said the executive branch had not been notified or asked to help correct “this pervasive and widespread misallocation of funds.” According to emails accompanying Paulsen’s letter, the DOT consulted with the DOM in 2022 about the financial irregularities.

“The Reynolds administration knew about this problem since it began, and everyone knew that the Justice Department had hired a specialist to conduct an in-depth review,” Sand said in a statement Tuesday. “In addition, the auditor is the only one of the bodies involved that cannot really fix the problem.

Grassley wrote to Sand and asked him why his office had not taken action since it was made aware of the legal debt collection problems two years ago.

“If you are made aware of a misallocation of funds by a government entity, it is your duty to Iowans to investigate, alert the public and attempt to correct the problem,” Grassley said. “Your inaction in this case is confusing and inexcusable. If there is another explanation for why it appears the taxpayer’s watchdog was sleeping on the job, I would be very interested to hear it.”

Sand called these comments “partisan bluster.”

“Don’t forget: Speaker Grassley moved forward and Gov. Reynolds signed a law last year that limits our ability to review many areas, including IT-related issues like this,” he said.

The law limiting the powers of the state auditor came into force in July 2023.