State Auditor Rob Sand

(music) Issues of how state and local governments spend money and are held accountable. We sit down with Iowa Auditor of State Rob Sand on this edition of Iowa Press. (music)     Funding for Iowa Press was provided by Friends, the Iowa PBS Foundation. The Associated General Contractors of Iowa, the public's partner in building Iowa's highway, bridge and municipal utility infrastructure. Iowa PBS is supported in part by Wells Fargo. Fuel Iowa is a voice and a resource for Iowa's fuel industry. Our members offer a diverse range of products including fuel, grocery and convenience items. They help keep Iowans on the move in rural and urban communities. Together we Fuel Iowa. Small businesses are the backbone of Iowa's communities and they are backed by Iowa banks. With advice, loans and financial services, banks across Iowa are committed to showing small businesses the way to a stronger tomorrow. Learn more at IowaBankers.com. (music)                For decades Iowa Press has brought you politicians and newsmakers from across Iowa and beyond. Celebrating nearly 50 years of broadcast excellence on statewide Iowa PBS, this is the Friday, April 23 edition of Iowa Press. Here is David Yepsen. (music) Yepsen: Since the coronavirus pandemic swept across the globe more than a year ago, governments at the federal, state and local levels have responded -- much of that response has been fueled by multiple injections of spending by the Trump and Biden administrations. And there are still billions of dollars of funding yet to be spent. Our guest today is tasked with auditing state and local budgets throughout Iowa. Still in his first term as State Auditor, democrat Rob Sand joins us at the Iowa Press table. Auditor Sand, welcome to the show. Sand: Thanks, David. Yepsen: Good to see you again. Sand: Yeah, you too. Yepsen: Also joining us across the table is Erin Murphy, Des Moines Bureau Chief for Lee Enterprises and Radio Iowa News Director Kay Henderson. Henderson: Last week on this program State Ag Secretary Mike Naig announced that he intends to seek re-election. What is your announcement? Sand: I have no announcement to make. I haven't decided yet what I'm doing. I spent most of my week actually reading the American Rescue Plan trying to figure out how our office is going to fit into some of that spending. So I'm still focused on that right now. Henderson: What are your options? Sand: Looking at re-election, potentially running for Governor, maybe running for U.S. Senate. Henderson: When will you make that decision? Sand: I don't know. Murphy: Well, Auditor Sand, we wanted to ask you about the state's pandemic response. As the government watchdog, if you had to give a letter grade to how the state has responded to the COVID pandemic over the past year plus, what would that grade be? Sand: I don't think you can take the whole state and give it a single grade. I think our vaccine rollout has picked up, it did not start in a good position. I think one of the best ways that, best places that credit belong are to the gentlemen that ran Iowa Vaccine Alerts Twitter account and then Vaccine Hunter. They really enabled Iowans to make it easy to find vaccinations. The financial side is very different. I don't think that the administration here in Iowa, the Reynolds administration, has done a good job handling the funds that Iowa received in order to mitigate the pandemic nor do I think that the budget has been handled in a good way to do that either. Murphy: So, do you have a role as Auditor in overseeing how the state has spent those dollars? Or do you foresee any kind of auditing or reporting along those lines? Sand: At the end of the day the taxpayer's watchdog has the ability to sniff around and to bark when we find something that is not going the way it ought to. And we did that when it came to $21 million in Workday spending. We have cautioned the Governor in taking half a million dollars to spend on her personal staff instead of actually mitigating the pandemic. She is going to have to document how that went in order for it to qualify. And the bigger issue to me is that we've got, at this point it's late April, close to a billion dollars sitting in the state's accounts while Iowans are suffering. And at any point a special session could have been called, the legislature could have passed something to get that money out there to struggling small business owners, to make sure that they can get through this pandemic and Iowa's culture in our small towns maintains what it used to be so we have a normal to come back to and they haven't done that. Murphy: Isn't the federal assistance enough -- we're getting literally millions of dollars -- Sand: We are. That money is coming too late for a lot of people. And it was bizarre to me to see the Governor of the state of Iowa say, that's the federal government's job. She is elected to look out for the state of Iowa, to serve the people of Iowa, and instead of Iowans getting what they need in this time of need she is going to do with that money what she wants. Henderson: What authority does your office have to review how the stimulus money is spent at the state, city and county level, if any? Sand: Sure. So let's go back to David's distinction between the money that came from the Trump administration versus the Biden, two different laws. The CARES Act money went entirely to state government. Federal money that comes to the state government is squarely within our jurisdiction. And so all the spending that happens related to the CARES Act under Chapter 11 of the Iowa Code is something that we have the ability to look into. I have not finished reading the American Rescue Plan yet. But what I have seen in there looks like it might be different. Some of that money is going directly to cities and counties. And so we are going to have to look a little bit more carefully to determine our ability to dig in on those issues. Now, counties that we audit we will of course be reviewing that spending for. Our office audits about a third of Iowa's counties. And cities that we audit we'll be looking at that spending too. But otherwise that might fall to CPA firms in the state. Yepsen: Elaborate on your earlier answer to Erin's question. You're critical of the Governor. What should we be doing differently in Iowa than what we have been doing? Sand: I think the number one thing is we want to have a normal to come back to. People who know small town Iowa, when I grew up in Decorah, the feeling of a business closing down hurts. It is what people talk about for weeks. And you look around the state right now and you have people who have poured their lives into creating a gathering place for their community and it might be the only one there and now this pandemic comes along and through no fault of that business owner they have had to shut down and they have lost their business. Small towns need those third places, those gathering places where people can see each other. And the fact that they have been unwilling to help, unwilling to assist, to me is wild. Just the restaurant association alone I think is looking at a thousand restaurants across the state of Iowa that have closed. And state government hasn't lifted a finger in terms of state funds to help them. Murphy: And to that, Governor Reynolds has said that there's just not enough money in the state budget to make everybody across the state whole. Do you disagree? Sand: Can you imagine a ship captain, the ship is going down and the ship captain says, well folks, we're going to just trash these lifeboats and these life vests because there's not enough for everybody? It's irresponsible. Yepsen: Come on. You imply that she doesn't care. Sand: I can't tell you -- the question to me, I don't know that we have to decide whether or not she cared, we can just look at what she did or didn't do, and she didn't do anything. Yepsen: Let's back up for a minute. Just what does a State Auditor do? Sand: Sure. Again, the state's watchdog, right, the taxpayer's watchdog. We have the ability to investigate, we have the ability to report and make information public. We don't have the ability to force folks to take action generally speaking. And so once we have taken that information and we have made it public, we have given the truth to the rest of the state and to other actors in state or local government, it is then up to other folks to move and to take action on those. Yepsen: During the campaign when you won this job it was pointed out you are not a Certified Public Accountant and that other auditors have been. How is that working out? Sand: It's been fine. Yepsen: And are you going to become a CPA or you just work around it? Sand: No. We have more than 20 CPA's in the office. Out of our tripartisan senior leadership team we have 2 CPA's. And look, the point that I was making to Iowans in 2018 that got most of them to say I agree with him is this office also conducts fraud investigations, it looks at issues of legal compliance. We need to balance that team out. We can't have it be all CPA's, we want to add some folks in there with some legal background too and some prosecutorial background. Henderson: So, back to the original question about your decision about what to do next, why would you stay in this current job? And it sounds as if you have thought a lot about running against Kim Reynolds over the past several minutes. You have some things that you might say on the campaign. Sand: I like this job. Henderson: So why wouldn't you run again? Sand: Well, I've got a four and a half year old, a freshly minted seven year old at home. Those are, these are big questions, they're hard to balance and there are certainly things that weigh in both directions and I just haven't finished weighing them. Yepsen: We're getting a lot of stimulus money in this state, an unprecedented amount of money. I've covered government long enough to know that even before we were getting all this stimulus money there was a lot of sloshing around of money and misspent corruption. What is going to happen when this wall of money, and a couple of wave's worth over the coming years, what steps are you going to take to see that that doesn't happen? Sand: Yeah, we have been proactive. In fact, when we all sat down, I think it was the same four of us, last time I was I think three days into the job. And I said at the time, I'm going to try to be more proactive than my predecessors have been in terms of looking at things as they are happening. To go back again to the watchdog analogy, you want a watchdog that doesn't wait until the burglar is on the way out of the house to start barking. When you look at that Workday money, that $21 million, with the CARES Act we had up until the end of 2020 to spend all that money. And so we pointed out that Workday issue along with the federal government prior so that the administration could get that re-spent. We're going to continue to be as proactive as we can be. Yepsen: Erin has a question. But first of all, what are you talking about when you're talking about Workday money? Sand: Workday money -- Workday is a computer program that essentially is for accounting and HR functions. We have an old system in Iowa with old computers that should be replaced. Workday is kind of a Cadillac version that the administration, Governor Reynolds decided she wanted. And they took $21 million of money that is supposed to mitigate the pandemic and put it into Workday instead. Murphy: And speaking of that, we wanted to ask you about that. So now the state is instead setting aside some money for that. As the taxpayer watchdog, what is your feeling about that? Is that program going to be good for clean, efficient government? Or do you have concerns about that program? Sand: So, we knew that the old -- the fact that the old system needed to be replaced doesn't mean that it had to be Workday replacing it. In fact, prior to this getting finalized, the Chief of Staff in the Auditor's Office, John McCormally, pointed out to the Reynolds administration there have been some concerns with getting auditable data back from Workday. And now here we are and this state's CAFR report is going to be late for the first time in a very long time because Iowa State -- Yepsen: Excuse me, that is an acronym for Comprehensive Annual Financial Report. Sand: Yes. Yepsen: Done by GAAP accounting, which is a Generally Accepted Accounting Principles. Sand: There you go. Yepsen: I'm sorry to interrupt. Henderson: And it is supposed to be done when? Sand: It was supposed to be issued I think at the end of January. And here we are, we're not done with it yet and that is because Iowa State, which is already using Workday, was late in supplying auditable information to our office. Murphy: And what is the issue that's happening? Why is it -- Sand: It's a new system. Workday frankly is something that has a lot of experience, its roots are in the private sector. Government accounting is different from private accounting. And so you can't just take that square peg and try to stuff it into a round hole. Henderson: And so the $21 million that the legislature has approved for spending state money to buy Workday is just for a couple of the departments, correct? Sand: The intention is to move the entire state over to Workday. Henderson: So would you recommend canceling that contract? Sand: Personally, I don't know why the contract was not already canceled. We need to replace the old system, it doesn't have to be Workday, and it shouldn't be done with money that is supposed to be making people's lives less miserable right now. Henderson: But they have appropriated state money to replace that $21 million. Sand: They have. Henderson: So you think they shouldn't use the state money to buy this program? Sand: No, I think that what we should have done is a program that would have been more aimed towards government accounting since we're talking about government here and maybe less of a Cadillac version. Henderson: Speaking of government accounting, you released a review of Medicaid managed care. Do you have another review coming? Sand: We do. Henderson: And what is it examining? Sand: So, the promises that were made when Medicaid was privatized was decreased cost and improved access and quality of care. We released a review talking to Iowans who are Medicaid providers who see all their patients come and go, who are going to know whose cases are the outliers, but what an ordinary case looks like. Less than 10% of all of those providers all across the state thought either quality of care or access to care had improved, less than 10% under this system. We are still working on our report regarding compliance, whether or not the MCO's, the managed care organizations that run this program now, are complying with the contracts that they signed and with the law when they are treating the most vulnerable Iowans . Henderson: And so when will you issue that report? That was an issue in your race. You criticized your predecessor for not releasing a report. Sand: Right. We're a lot closer to being done than we are to having started. I don't tend to make promises because I want to have a complete report and I don't want to put a deadline out there that then is competing with the integrity of the report. Yepsen: I want to go back to this Workday question Erin had. We talk about GAAP and CAFR, it gets pretty arcane and eyes start to glaze over. When are we going to get a comprehensive annual financial report for last fiscal year? These comprehensive annual reports are a system by which governments keep their books so that they can be compared, we can look at how we have spent money with 49 other states and the District of Columbia, generally accepted accounting principles are used. So when do we get a chance to have that kind of budget? Sand: Yeah, I checked in with our folks about this about two weeks ago. I think at this point we have now received from Iowa State all the information that we need. And so we have to now finish reviewing that and actually auditing that in order to then issue it. Yepsen: So this should have been done in September and done by December, right? Sand: Our folks are moving as quickly as they can. But they can't audit information that they haven't received yet. Yepsen: Will we get this before the 2022 election? Sand: Oh yeah, oh yeah, oh yeah. Both of these, yeah. Murphy: A couple of years ago, and this must have been shortly after you were on this show because it was also shortly after you were elected, you were the lone vote against a state settlement to the former Iowa Finance Authority Director who had been accused of sexual harassment. You wanted the Attorney General's Office to pursue that person individually rather than put the state on the hook for that. Could you expand on that? And why is it not better for the state to just handle this and settle these kinds of cases? Sand: It's a combination of the two. It's not a question of whether or not the victims should be made whole. They should. They should get paid for the harassment that they endured. But if we ever want to see fewer people sexually harassed by people who are supposed to be serving the public we have to hold the people who are doing the harassment accountable. Dave Jamison is looking at an IPERS payout expected value for the rest of his life of $2 million. I don't know if he's got a rich uncle somewhere, I don't know if he's got a lake house somewhere, I don't care where it comes from, he should be paying for this, not the people of Iowa. And it makes me angry because we can't fix the problem of sexual harassment or sexual assault in this state if we don't hold people personally accountable when they are the ones that are doing the act. Henderson: Pretty soon after you took office you announced that any employee who wanted to live elsewhere in Iowa and do remote work, and this is before the pandemic and before people were working at home, might have that opportunity. How many people in your agency are now not working in the Des Moines Metro area as a result? Sand: I don't have a solid count right now. We have about 80 people that it would apply to. It would be a handful at this point. We have had folks move to Clayton County. We had one gal move to Henry County to Mount Pleasant. But as you mentioned, the pandemic has really upended a lot of people's plans. What I think is important in this program, which we call Statewide Work Statewide Jobs, is just giving people the freedom. Once you have been in the office for a year, if you want to go live and work in Northwest Iowa, good, we're going to assign you to work in Northwest Iowa. You get to be home more often, that town that you want to live in whether it's Rock Rapids or Cherokee gets to have another family in town. Again, this goes back to growing up in Decorah and a guy that I went to high school with who was maybe a year or two behind me is now a doctor and just moved back to town and there is a billboard up welcoming him back. It means so much to small towns when you can get even one family to move back. And so even with the pandemic and everything else we haven't seen a lot of movement yet it's still the right policy to have in place. Yepsen: I want to switch gears to the issue of public debt. We have in this state some of the lowest levels of public debt of any state in the country and most Iowans that would be all right, we don't like debt. But is it too little debt? Isn't this a time when we ought to be borrowing money at low interest rates to do projects, to fix up infrastructure? We could borrow, I looked one time, you could borrow a billion dollars in this state and our per capita levels of public debt would still be lower than most other states. What is your philosophy about the use of debt? Sand: It's a good question. Personally I remember my parents giving me a loan when I was in maybe ninth grade to buy a bike. And then I didn't get to buy very many CDs or get to go to very many movies because I kept having to give them all my money so I could write a new number inside the cereal cabinet every morning for what I owed them. So I personally have a bit of an aversion to it. One of the reasons I went to Iowa law school is because I didn't have to go into debt to do that. You make a good point. Credit to State Treasurer Mike Fitzgerald, he recently said hey, let's take a look at our tobacco settlement funds and we just are now in the process of reissuing that to take advantage of lower interest rates. That aside, I really think that the amount coming from the American Rescue Plan, it's an incredible amount of money, and knowing what we're going to do with that and figuring out what we're going to do with that first, knowing that that money is coming in is probably more responsible than tacking on right now any additional borrowing to do something else. Yepsen: What happens to the interest money? If the federal government is going to give this state tens of millions of dollars, what happens to the interest? You can't spend it all at one time. You’re going to have that money sitting in a pot. The interest comes off. What happens to that money? Sand: I haven't finished reading the American Rescue Plan yet. So, all the money that is coming into the state has got to be spent by I think it's 2024. And so it has all got to be spent by then. While it's in that interim period I don't know if it's earning interest, if it is earning interest I don't know who that interest would be going to. Henderson: There's hardly a week that goes by that your office doesn't issue some special investigation of a small town where a public official has used public money for personal expenses. Is there any legislation that you would view as a way to tackle that problem? Sand: Yeah. And, again, I think this is out of partisanship, I have been disappointed to see it not getting, not moving. I've asked the legislature, I've said this for a long time, it has been my consistent position, we can no longer let people steal large amounts of taxpayer money and get off with a slap on the wrist. You have to serve some time. It doesn't have to be 5 years, it doesn't have to be 1 year. But we have to stop letting people just get a sentence of probation. When people steal public money, tens of thousands of dollars, and they get a sentence of probation, other people who have the opportunity to take that money look at that and they'd say, hey look at that, it's like an interest free loan, all I've got to do is just take the money now, I don't have to fill out any paperwork, and I guess I'll just pay it back later in restitution. We're doing nothing to discourage people from doing that. I've had a bill that we worked on with the Iowa Association of Justice. We worked on it with defense attorneys across the state. It's a good bill. It would help deter people from stealing public money and the legislature won't move it because the idea is coming from a democrat. Murphy: We just have a couple of minutes left. I wanted to shift gears a little bit and ask you about the Iowa Democratic Party that you represent. It's a party that is a little bit on the mat right now, just one member of Congress, haven't held the Governor’s Office in more than a decade now. How do you see your role as one of these statewide office holders as a democrat in helping to rebuild the Iowa Democratic Party? Sand: No one can serve two masters. And at the end of the day I want to be personally a servant to the state, to everyone in this state whether they are a democrat or an independent or a republican or libertarian or green or what have you. That is my priority. Now, that doesn't mean there aren't real differences between the parties. I want to see, I think it would be good to see divided government in this state. We see all these kinds of crazy things happening because there's no check and no balance on republicans right now. They hold the majority in the Senate, they hold the majority in the House and obviously the Governor's mansion. They passed a law that limits how efficient utilities can be in the state of Iowa. Every single time those words come out of my mouth I can't believe I'm saying it. It's bizarre. So, yeah, I'm a democrat. Yeah, I'm the young one out of the three of us that are elected statewide. I want to help other folks be successful in the party. But the bigger priority is just trying to get the right thing done whatever that is. Yepsen: So in other words, if you get too partisan you worry that this will exacerbate your relationships with republican legislators? Sand: Our system of government is too partisan. We have people who get elected who actually think it's their duty to serve their party or who might want to serve the public but who say, well I'm really worried about a primary and so I don't want to get too congenial with the other side, I don't want to do any compromising that might serve everybody because I might get punished for that. I think that is why the bill on punishing theft of public funds hasn't passed. I think that is why the bill on reforming how the Auditor's Office is funded to prevent public fines paying the federal government hasn't been passed. Yepsen: I'm sorry to interrupt but one thing I can't compromise on is the clock. We're out of time. Thanks, Mr. Sand, for being with us. Sand: Thanks for having me. Yepsen: And we'll be back next week with another edition of Iowa Press at our regular times, 7:30 Friday night and Noon on Sunday. For all of us here at Iowa PBS, I'm David Yepsen. Thanks for joining us today. (music) Funding for Iowa Press was provided by Friends, the Iowa PBS Foundation. The Associated General Contractors of Iowa, the public's partner in building Iowa's highway, bridge and municipal utility infrastructure. Iowa PBS is supported in part by Wells Fargo. Fuel Iowa is a voice and a resource for Iowa's fuel industry. Our members offer a diverse range of products including fuel, grocery and convenience items. They help keep Iowans on the move in rural and urban communities. Together we Fuel Iowa. Small businesses are the backbone of Iowa's communities and they are backed by Iowa banks. With advice, loans and financial services, banks across Iowa are committed to showing small businesses the way to a stronger tomorrow. Learn more at IowaBankers.com.