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Audits Expose Irregularities in Iowa Prison System Spending

Over the five-year period ending June 30, 2014, officials in the 6th Judicial District of the Iowa Department of Correctional Services misspent $1.2 million, mostly for improper payroll costs to workers at the Community Corrections Improvement Association, a non-profit agency started in 1991 by Gary Hinzman, a longtime district leader who retired in May 2014, according to a state audit.

The financial study was released on July 1, 2015 as an addendum to a previous audit that found $650,000 worth of improper spending for payroll and vacation costs for former employees at levels well above the benefits received by 21,000 other Iowa state employees.

“These disbursements had a significant financial impact on the district over several years,” concluded state auditor Mary Mosiman, referring to the million-plus misspent dollars identified in the addendum. She also found the state could have saved another $285,000 if a different program other than the one operated by the Community Corrections Improvement Association (CCIA) had been selected to provide services.

The 6th Judicial District is one of eight in the Iowa Department of Correctional Services that oversee the state’s pretrial release, pre-sentence investigation, probation, parole and work release programs. Along with the 1st and 5th Judicial Districts, the 6th District covers Des Moines, Newton and Anamosa.

According to the audit addendum, some workers were provided with as much as an extra week of vacation each year and additional sick time leave not provided to other state employees, which added up to over a million dollars over the five years examined by the study.

These findings were in addition to the initial audit, released in January 2014, which cited $443,900 in improper payroll costs and $210,000 in improper vacation payouts to former employees, including $40,000 for vacation paid before it was earned. The 68-page initial audit covered the period from July 1, 2008 to June 30, 2012 and revealed shoddy budgetary practices, double-billing, duplication of services and outside contractors using state services for free.

“The lack of appropriate fiduciary oversight and the failure to ensure implementation of adequate controls over budgeted expenditures resulted in the District operating in a deficit position,” Mosiman concluded.

CCIA was also singled out in the audit as being responsible for $563,000 of the misspent funds by using state vehicles, cell phones and state-owned office space, without reimbursement, over a period of several years.

In a meeting with 6th Judicial District employees, Department of Corrections Acting Director John R. Baldwin acknowledged that there had been problems in the past, and that CCIA had been part of the problem because the Association’s operations often duplicated other state-funded correctional functions. In 2007, Baldwin had signed off on one contract with CCIA but declined to sign agreements for the years 2008 to 2011.

Baldwin also came under criticism at the meeting from union leaders with the American Federation of State, County and Municipal Employees (AFSCME), who alleged that he had done nothing to halt the misspending once it came to light.

“You’ve got some concerns about the district in the past. Why did you not come to the [Judicial District] Board and head this off at the pass?” asked Julie Schultz, a district probation and parole officer and AFSCME representative. In reply, Baldwin maintained that he had not been advised of any problems regarding the 6th Judicial District until many employees began to voice concerns. He called the district “an agency that’s in turmoil and needs help.”

The impact on the state budget prompted officials in the 1st and 2nd Judicial Districts to announce eight layoffs. In District 1, covering northeast Iowa, the state planned to lay off two community program monitor workers and eliminate a third probation and parole officer position that was already vacant. In District 2, covering the north-central part of the state, two planned program monitor workers were transferred to other unfilled positions and three other vacant positions – two probation and parole officer jobs and one treatment coordinator position – were eliminated.

The announced job losses brought a swift response from AFSCME, which advanced a plan to achieve parity in sick leave and vacation time at a savings to the state of at least $26,000 for every week of extra vacation granted to District 1 community-based managers, thereby avoiding the harshest consequences of the projected budget deficit.

“What our department is doing here is plain and simply wrong,” said District 1 AFSCME representative Robert Henderson. “Basically what they and our board are saying is: ‘We don’t care what the special audit report says. We don’t care that we have means to make restitution, save taxpayers money and get into compliance with the code. We are going to continue to do business as usual.’”

Henderson also claimed that the budget shortfalls would reduce or eliminate some programs or positions that have been successful in reducing recidivism.

In an email to the Des Moines Register, District 1 Director Karen Herkelman defended the decision to not adjust employee accrued leave, claiming that any changes would have only a minimal impact on spending in the face of a more than $1.1 million fiscal year deficit and would not prevent the layoffs. She said all current District 1 employees will have jobs if they so choose because of “bumping rights” in their contract.

Meanwhile, Iowa’s prison system is under pressure from state lawmakers to either correct the problems revealed in the audit or have the state legislature do it instead. Two legislators who are key in determining Iowa’s prison budget, Senators Tom Courtney and Chip Baltimore, both said they would review the deficiencies uncovered by the audit and may initiate or support legislation to address the problems if prison officials fail to act.

Iowa spent approximately $293 million on its corrections budget in fiscal year 2015.


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