(Des Moines) The House Government Oversight Committee questioned Auditor Rob Sand Wednesday about his office’s work on the misallocation of $27.5 million in court debt funds caused by coding errors.
The committee had brought Iowa Judicial Branch and State Court Administration officials in a meeting earlier in April to learn more about the programming issue that caused seven state funds to be underfunded between fiscal years 2021 and 2024. During that period, money that should have gone to those funds was erroneously sent to the state’s general fund and two other funds, but remained with the state government.
The errors were introduced when legislation passed in 2020 and 2021 made changes to the state’s court debt collection and distribution systems. The state auditor’s office was first alerted of financial irregularities by the Iowa Department of Transportation in 2022, but did not release an audit on the subject until December 2024.
House Speaker Pat Grassley and Iowa Department of Management Director Kraig Paulsen have criticized Sand for not taking action sooner — and for the issue not being mentioned in audits of the judicial branch for fiscal years 2021 and 2022. But Sand, the sole Democrat to hold statewide elected office in Iowa, told the committee Tuesday that an audit did not take place on a quicker timeframe because the issue was identified as a coding error, which is not a subject his office has employees to address.
“I don’t think that it was inappropriate for the Reynolds administration and the judicial branch — both of which knew about this issue before the auditor’s office — I don’t think it was inappropriate that they took steps to address the issue together before informing the auditor’s office,” Sand said. “That’s because, fundamentally, this was not an audit issue.”
After the coding error was identified, the judicial branch contracted with the National Center for State Courts (NCSC) to review and make recommendations on how to address the misallocations and legal issues caused by the programming error. In a December 2024 statement, State Court Administrator Robert Gast said the judicial branch corrected the coding errors in the case management system as of Nov. 22.
Some GOP lawmakers on the committee criticized the auditor’s office not being more involved in the process of correcting and identifying the misallocated court debts. Rep. Judd Lawler, R-Oxford, said “the auditor’s office allowed the problem that has presented itself in 2022 to be farmed out to a third party that has no responsibility to Iowa taxpayers,” referencing the judicial branch’s work with NCSC.
Sand disputed this characterization, saying the auditor’s office has “no capacity to tell the judicial branch that they cannot hire an outside expert,” but that lawmakers have the ability to limit that ability or to appropriate funds for the auditor’s office to hire a coding expert if they believe these are the correct steps to prevent similar, future problems from arising.
The auditor also said the way the judicial branch approached the issue was not necessarily a sign of wrongdoing or abuse.
“Let me put it this way: it’s not uncommon for entities to dig in an issue and answer some questions first before they notify us,” Sand said. “Now do I wish that everybody told us right away on day one? That would be great. Immediate notification be great. The trick of that would then become, how many times do we get notified about something and then it turns out to be an issue that actually has a very similar answer, that we don’t need to be dialed in on?”
However, some legislators argued the state auditor’s office should have been more involved — and aware of the issue earlier — because it involved the misallocation of state funding. According to the auditor’s report, the error caused an under-allocation of $10.4 million for the Road Use Tax Fund and $7.2 million for the Victim Compensation Fund.
While there were audits of these funds that could have spotted the discrepancies, Sand said the amount of money misallocated was a small proportion of overall funding — in the case of the Road Use Tax Fund, a 0.13% variance from typical spending. He also said that because this money, though sent to the wrong accounts, stayed within the state, it was not identified in “high-risk areas” for consideration during audits.
He compared the misallocation to a situation where a bank incorrectly puts a person’s money in their checking account instead of their savings account, emphasizing the money still remains with the person — or in this case, with the state.
“Your high-risk areas aren’t going to be your internal transfers, because if you mess it up — again, it’s your money in your savings account versus your money in your checking account — you still have the money,” Sand said. “You’re also going to look at places you’re going to flag, large transactions or new areas of review, are typically something that you want to add scrutiny to. But when you’re talking about 0.13% variance in internal transfer, even if you realize that you had an issue there, you probably have bigger fish to fry.”
Rep. Charley Thomson, R-Charles City, released a statement after the committee meeting criticizing Sand’s comments, saying the auditor “continued to downplay the significance” of the court debt misallocations.
“This misallocation has had significant consequences,” Thomson said in a statement. “Victims of crime have been denied timely compensation owed to them, infrastructure projects such as bridge repairs and road improvements have been delayed, and community safety programs have been underfunded.”
Criticisms by Iowa Attorney General Brenna Bird in October 2024 tied the auditor’s office not catching the coding issue to crime victims not being able to access services and support through the Victim Compensation Fund.
“No domestic violence victim should have to stay with their abuser because they cannot afford to leave,” Bird said in the statement. “The State’s self-proclaimed ‘taxpayer watchdog’ failed at the most basic job of being an auditor: conducting an audit. Crime victims should not have to worry about whether victim services will be there when they need them.”
Sand had argued in the meeting that he was not mischaracterizing the importance of the issue, but stating that the funding did not result in the impacted government accounts like the Victim Compensation Fund running out of money — or denying Iowans services because of the underfunding. The auditor’s report found this fund’s lowest balance from FY 2021 to 2024 was just under $2.7 million, and that the other impacted funds also did not run out of funds during this period.
“There wasn’t anybody at this table, but there are people in the state of Iowa who have asserted that because of the misallocation of judicial branch services weren’t provided,” Sand said. “This statement shows that that’s not true.”
Several Republicans on the committee also asked for “verifiable” and “traceable” information, which Sand said was information provided in the audit, but added lawmakers can make further formal requests for information on transactions.
The focus on Sand in the government oversight committee meeting comes as the auditor is expected to run as a Democratic candidate for governor in the 2026 general election. Some of the Republicans who have made statements criticizing Sand over the court debt misallocation issue, like Bird and Speaker Grassley, have also indicated they are considering a gubernatorial run after Gov. Kim Reynolds announced she will not seek reelection in 2026.
