The campaign for State Auditor of Iowa

Sep 28, 2018  | 27 min  | Ep 4606 | Podcast


On this edition of Iowa Press, incumbent Mary Mosiman (R-Ames) and challenger Rob Sand (D-Des Moines) join reporters to talk about their campaigns for the State Auditor’s office. 

Joining moderator David Yepsen at the Iowa Press table are Kay Henderson, news director for Radio Iowa, and Brianne Pfannenstiel, chief political reporter for The Des Moines Register.

Program support provided by: Associated General Contractors of Iowa and Iowa Bankers Association.


David Yepsen:                   A state office that digs into budgets and investigates waste and fraud. But the Iowa state auditor's role is often under the radar. We sit down with incumbent Republican Mary Mosiman and Democratic challenger Rob Sand on this edition of Iowa Press.

Voiceover:                          Funding for Iowa Press was provided by Friends, the Iowa Public Television Foundation. The Associated General Contractors of Iowa, the public's partner in building Iowa's highway, bridge and municipal utility infrastructure. I'm a dad. I am a mom. I'm a kid. I'm a kid at heart. I'm a banker. I'm an Iowa banker. No matter who you are, there is an Iowa banker who is ready to help you get where you want to go. Iowa bankers, allowing you to discover the genuine difference of Iowa banks.

Voiceover:                          For decades. Iowa Press has brought you politicians and newsmakers from across Iowa and beyond. Now celebrating more than 40 years of broadcast excellence on Statewide Iowa Public Television, this is the Friday, September 28 edition of Iowa Press. Here is David Yepsen.

Yepsen:                                The state auditor may not be the first office every Iowan thinks of ahead of the 2018 election. But this office in state government can loom large in the midst of potential investigations and financial oversight. Republican Mary Mosiman was appointed by Governor Terry Branstad as state auditor in 2013 when David Vaudt resigned. She won a full term as auditor during the 2014 election. Rob Sand previously served as assistant attorney general for the state of Iowa. He is the Iowa Democratic Party's nominee for state auditor. I'd like to welcome you both to Iowa Press.

Mary Mosiman:                Thank you. It's nice to be here.

Yepsen:                                Thanks for being here.

Rob Sand:                            Thanks very much.

Yepsen:                                Across the table, Brianne Pfannenstiel, chief political reporter for The Des Moines Register, and Kay Henderson is news director for Radio Iowa.

Kay Henderson:                The governor's race gets a lot of attention. Some of our viewers may not know either of you. Let's start with Ms. Mosiman. If you could, just give that little elevator speech to somebody who has never met you before.

Mosiman:                            Okay. Well, I am an auditor. I am a CPA. I place a great value on the role that audits have to the people of Iowa. And the state auditor's office is a CPA firm, and we audit state and local government entities helping make sure that government officials are using your tax dollars for the public purpose intended.

Henderson:                        Mr. Sand, for those who've never met you before, who are you?

Sand:                                     Rob Sand, born and raised in Decorah, Iowa, and Iowa's chief public corruption prosecutor over the last decade. No one's prosecuted more financial crime in Iowa than I have in that timeframe. The Iowa film office tax credit scandal, the lottery rigging scandal - it was the largest in the nation - are all cases that I handled. The state auditor's office is responsible for public corruption investigations, and the biggest reason I'm running and as I've worked closely enough with the office to see that I think there needs to be a law enforcement perspective within the office.

Pfannenstiel:                     Medicaid is an issue that's been in the news a lot lately. It's become a major issue in the governor's race, but the auditor's office also has a role to play. Ms. Mosiman, your office ordered a review of the Medicaid program back in June, asking to look at how much the state's actually saving and where that savings is coming from amid a lot of fluctuating reports. So, are voters going to see that information before they go to the polls in November?

Mosiman:                            For those of you that have worked with me in the past, I can't answer specifics about a work in process. We did recognize after there was different information out there that we needed to provide some financial clarity. An audit does typically not audit the savings, but because there was confusion about the savings, we wanted to address this issue. So ideally, the method of determining how the savings would be that would be the would be guessed, will be gauged, would be worked into the implementation of the privatization process or into the law. And it wasn't in this case and we did comment on that, um, as this privatization first took place. But that being said, now that we've had a couple of years of this process, there are some numbers for us to work with. We are seeing the same information that has been publicly reported in the media. And when we get done with our work, it will be a report that is complete, that will be comprehensive, and that will be verifiable because that's the key information that is needed from finances that people can trust the information. But will it be released before the election date? I can't answer that, because we have never let the political process dictate our work product. We are doing this in addition to our statutory work, as well as our ongoing investigations. But we do have this as a priority.

Pfannenstiel:                     And Mr Sand, what is the auditor's role in overseeing the Medicaid program and how would you address this issue?

Sand:                                     This is the office that's supposed to be a watchdog for Iowa taxpayers. And I think one thing that a watchdog should be doing is as soon as there's a major change, you ought to be sniffing around. Uh, I look at Medicaid privatization and I see a program that has been a revolution for Iowans. People who are on the program, care providers in the state of Iowa. We're in a state of upheaval with this issue. And to me, while I agree that the audit or the examination shouldn't be political, it ought to acknowledge the fact that people are going to be walking into their, uh, voting booths in a couple of weeks here with a really important decision to make. And I think they deserve to have clarity and transparency in making that decision. It doesn't mean that that determines what the result is. It should be a dig down into finding out what the truth is. And Iowans ought to know what the truth is. There was a program that my opponent was on on radio a few weeks ago where she said that, uh, providing financial clarity was a goal if re-elected. And then just about a week after that, Jerry Foxhoven at DHS said he was expecting any day now a report to be issued. So I am curious to know what is going on behind the scenes there and whether or not there's been political pressure provided.

Yepsen:                                Ms. Mosiman, do you care to respond to that?

Mosiman:                            I read that same article from the director of DHS, and I don't know where that particular remark came from. So, we do not communicate with the entity when we're going to release the report, specifically when it's a work in process.

Yepsen:                                But you know how this looks. You're a Republican. This is a controversy that's got the governor, uh, behind the eight ball. It looks, it looks to a lot of people like you're slow walking this thing in order to keep her from taking a bad hit on election day. What do you, how would you say to that?

Mosiman:                            I will say without any qualms whatsoever, we do not work for the governor. We do not work for the General Assembly. We are an autonomous office. We work for the people of Iowa. This is an important issue. You should want the information to be complete. You should want it to be comprehensive. You should want it to be verifiable. That takes time, and you can't push the auditor's office based on or you can't push a financial information office on behalf of a political calendar. I understand the priority and I understand the election calendar. It will be issued. I just can't give you an exact date, or I would be also behaving politically in an office because I would be dropping the statutory duties and the other ongoing investigations. Everything we do in the auditor's office is important. There's dead, their statutory deadlines. There's sometimes other outlying factors. But we do understand the importance of getting this information to the people of Iowa.

Henderson:                        This past January, you issued an examination of the Iowa Communications Network, based on information from a whistleblower. The executive director of the agency was fired. Um, should there be more followup? Should there be a legislation that would in some way respond to this agency which was able, as you say, to hide information from you as a member of the Iowa Communications Board?

Mosiman:                            Yes, we did work with the General Assembly. I think we started a little bit too late for it to get passed this past legislative session. We would be very supportive. In fact, we gave proposed language to specific legislators for whistle blower protection. The fact that it didn't pass, however, by the time that they adjourned doesn't stop us from proceeding with what we are calling, making sure Iowa employees of government entities, when they noticed that there is somebody within the organization misusing either public dollars or public assets that they know what to do. When those red flag indicators are there, who do they report to?

Henderson:                        Why didn't you call legislators on the carpet for not acting?

Mosiman:                            Well, the legislative session was when did they adjourn? But we were talking to them throughout and we have, whenever the legislators adjourn and it hasn't, the legislation hasn't happened, Um, we usually start making plans for the next. We don't have all that many legislative objectives. But this objective, we made sure to go ahead and proceed. Iowa law does allow us to keep things confidential. We made that clear to employees in a recent communication to them.

Henderson:                        Mr. Sand, do you think there are ways that state law regarding whistle blowers needs to be updated?

Sand:                                     I do. But I also, I look at the ICN and in 2016, the Des Moines Register blew the whistle on something fishy happening with the ICN. There was an editorial that ran that questioned how it was that the executive director could be getting paid $120,000 in his taxpayer funded salary and at the same time filing paperwork saying that he worked full time for his own organization in Marion, Iowa. So this, this is someone who's apparently according to this newspaper in 2016 working two full time jobs, a four hour round trip apart. And the state auditor was sitting on the oversight board when that article came out. Did nothing with it. Missed more meetings of the oversight board than anyone else on that board. Meanwhile, the executive director was stealing and misspending $400,000. I...the whistle was blown. I look at this and I think that there's a failure to dig in and a failure to act like a watchdog.

Yepsen:                                Ms. Mosiman, how do you respond?

Speaker 3:                           Well, some of the accusations that my opponent has put out here on the table are not exactly accurate. This was a whistleblower who came forward after a medical emergency and discussed one issue with us and that was the only money that was actually stolen. That was the money that was taken from a trailer purchase and being sold on Ebay. Everything else that was in that report, totaling not 400,000, but that's okay.

Sand:                                     380.

Mosiman:                            There you go.

Sand:                                     I said nearly, I think.

Mosiman:                            I like accuracy.

Sand:                                     I think I said nearly.

Mosiman:                            You round it up. But that being said, was poor management decisions. And I will say and I've said many, many times that when somebody has is in a position of authority and they have the knowledge and the desire to circumvent controls, they can and they will in this particular case. So those

Yepsen:                                Very quickly.

Sand:                                     Well I would like to know specifically what it is. Was it just the $400,000, the rounding 380 to 400? Is that the only issue that you're taking with my statement? Because if she's going to say that something that I said is inaccurate, I'd just like to know what it was.

Mosiman:                            No, I'm just saying it wasn't $400,000.

Sand:                                     OK, 380. OK.

Yepsen:                                We need to move on to other issues for you. Brianne.

Pfannenstiel:                     The Iowa Finance Authority is another state agency that has seen considerable problems in the last couple of months. Director, Dave, former director, Dave Jamison was fired after allegations of sexual misconduct. Um, Ms. Mosiman, you, that's another area where your office has done some auditing. What did you find in that process?

Mosiman:                            Well, the one state, well there's two state agencies which the state auditor's office does not have the authority to audit. And the Iowa Finance Authority is one of them. So we have never been the annual auditor for the Iowa Finance Authority. But whenever there is a report of significant financial irregularities, we do have the authority to go in. So we did in this case, even though we know that the board hired the same private CPA firm that had been conducting their annual audit. So that's also a work in process. We know people are waiting for that information as well.

Yepsen:                                Mr. Sand, how do you think her office has handled this?

Sand:                                     Um, you know, a big piece of what came out on the financial aspect of IFA came out in part because I as a candidate started digging into it. Uh, I had heard allegations of a lease that was going to be wasteful of taxpayer money. And so I issued a public records request to IFA at the same time that I announced that I was doing it. It wasn't a secretive investigation. And it turned out that they executed a lease that was going to waste $6,000,000 in taxpayer money. That started a lot more digging that unearthed or helped unearth a lot of this other stuff. That's not to say that the sexual harassment issue is a separate one. But it's all at IFA. And I look at this and I see someone who, clearly Jamison was bragging to people about the closeness of his relationship to the governor. And it worries me that we need to have more independence and more people that are willing to go after people no matter who their friends are.

Yepsen:                                We've got way too many issues and not enough time. Kay?

Henderson:                        Ms. Mosiman, you and your Republican colleagues have been saying that if Mr Sand is elected that the government entities are going to have to spend 5 million more dollars doing audits. On what basis do you make that assertion?

Mosiman:                            The state auditor's office is a CPA firm and we have been for many, many years. And the reason that we are a CPA firm is because the elected state auditor has been a CPA and has been for almost 40 consecutive years, dating back to 1979. If the elected state auditor is not a CPA, the office loses its status as a CPA firm and that is something that my opponent concurred with during his taping of We Are Iowa earlier this year. So that being said, I have been saying that if we are no longer a CPA firm, we can't conduct this annual audit work and the current code allows us to outsource to private CPA firms if we are no longer able to do the work.

Yepsen:                                Mr. Sand, how do you respond?

Sand:                                     Whether or not the state auditor's office is a CPA firm is as important to the work they do as the fact that I am a certified expert bowhunter and my opponent is not. It's pointless. It makes no difference as to whether or not this office can do its work. It's found in chapter 11. There are four, four Republican county attorneys in this state who have all said my opponents interpretation is flat wrong. And that includes a former state party chair. This isn't really an issue. It's a claim I think that's used to distract from real issues in this race.

Yepsen:                                But Mr. Sand, whether, whether it should legally be required, isn't it just a good idea to have a state auditor be a CPA?

Sand:                                     You know, not when that state auditor neglects to appreciate the perspective of law enforcement. We have had case after case issued from this office, which has two divisions. One is audits, the other is investigations. And they issue investigations. They have no one on staff with law enforcement experience. So while her qualifications fit well in the one, there are also 30 other CPAs in this office that can help with those qualifications. Meanwhile, their investigative division has nobody with law enforcement experience. $100,000 embezzled from Anthon in northwest Iowa. Nobody in the state auditor's office knew that they were going to have a deadline on that. When they released the report, it was after the statute of limitations on that.

Mosiman:                            That's absolutely not true. That was released before the deadline.

Sand:                                     You can call the

Mosiman:                            You can call the attorney. You can talk to the attorney.

Sand:                                     You can talk to the attorney.

Henderson:                        Why didn't you bring this issue? You faced a non CPA four years ago. You didn't bring this issue up during that campaign.

Mosiman:                            No. The message was the same four years ago.

Henderson:                        No, it wasn't. You never said

Mosiman:                            Well,

Henderson:                        government entities would have to spend more money on financial statement audits. You never raised that issue.

Mosiman:                            But my message was, my message was I'm the only CPA running for state auditor. It was just never challenged that significantly with my previous opponent.

Henderson:                        What do you mean by that?

Mosiman:                            He never said he could audit. He never said that he could delegate the services. He just talked about his own race. He didn't say that he could audit. Otherwise we would have gone down to the same level of detail of what it would cost based on what we currently bill out. So we have had, and my predecessor also had the same message. He would've had the same response if his opponents would have pushed it to the next level.

Pfannenstiel:                     Mr. Sand, you helped prosecute a major lottery rigging case here in Iowa. Can Iowans be assured that the program is safe now and that it's not rigged?

Sand:                                     Uh, look. Every time you build a better mouse trap, somebody builds a better mouse. Okay. There are always going to be people out there who, given the opportunity, will abuse a position of trust. The Multistate Lottery Association has taken all of the games that used Eddie Tipton's false random number generator out of circulation. So is that, uh, is that trick still out there? No. Uh, but there's always somewhere else that somebody can do something sneaky. So we always have got to be vigilant about that.

Pfannenstiel:                     I'd also like to ask how you both feel about legalized sports gambling in the state. The Supreme Court has paved the way. The Iowa Legislature has said they'd like to make that easier in the state of Iowa. Can we be assured that that will work as it's designed? Uh, we'll start with Ms. Mosiman.

Mosiman:                            Well, anytime there's a new initiative, what the state auditor's role is, is during the audit process, after the program has been implemented, making sure they're following the processes and making sure that any money coming in and money going out is handled as appropriately as possible. So as one of the auditing standards, we must maintain independence in our office, so we wouldn't be at the table as they're establishing policy for the most part.

Yepsen:                                But isn't don't have an opinion whether it's a good idea or not for Iowa to get involved in this?

Mosiman:                            If I gave an opinion whether it's a good idea, that could impact my independence. So we typically stay, as far as following auditing standards, you want your auditor to maintain independence. Otherwise the people who are relying on the competency of that information would have a perceived bias of because you've given an opinion.

Yepsen:                                Mr. Sand

Sand:                                     I think you can handle that through transparency. Um, I think if you are able to put out numbers in such a way that people are able to understand and see exactly what you're doing all the time with the analysis you're giving out, your conclusion, whatever it is, uh, has transparency and that provides its independence.

Yepsen:                                So you don't. So you think it's okay for Iowa to get into sports betting as long as you have this transparency?

Sand:                                     You know, as a lawyer at this point, the Supreme Court has answered the question and we don't really have a choice. It's something that the Supreme Court said is the law of the land. I think once you're told that it's the law of the land, you need to respond and set up some sort of system for it.

Yepsen:                                We have just a few minutes left. Ms. Mosiman, last week there was a report out of the governor's office that the state budget is balanced and has an unexpected surplus. What's the condition of Iowa's finances?

Mosiman:                            Well, we all are, we're just now closing the books. It's the end of September. The budget is on a modified cash basis. I did say that the budget was balanced because one has to understand the basic definition of a balanced budget, which is your ongoing expenditures equal your ongoing revenues. So when you have no one-time revenue sources being used to balance your budget, it is a balanced budget.

Yepsen:                                Mr. Sand, what's the condition of Iowa's finances?

Sand:                                     Uh, not great. Still.

Yepsen:                                Why?

Sand:                                     Because a huge chunk of that surplus is from the federal tax change in tax policy. Another huge chunk of that is from accruals, which somehow mysteriously are far beyond what the revenue estimating team had put together even though historically they've been very accurate in that. Uh, I, I see this as a, a probably a one-time bump up in a budget that's going still the wrong direction. And I think we need to have someone in this office who is going to blow the whistle on that. Five years ago we had $923,000,000 sitting in our surplus accounts. Then had a borrow over 100 million. And every step along the way, our state auditor has said that we were on a sustainable path.

Henderson:                        The Iowa Public Employees Retirement System has a lot of money in it. A lot of investments, and a lot of retired folks in Iowa are depending on it. Is it a sound system Ms. Mosiman?

Mosiman:                            It's a sound system, depending on who you're listening to. I am one of the people who has been part of that discussion as far as making sure the information in our financial reports accurately reflects the unfunded liability, not just for the state of Iowa, but for all of the counties, the cities, the townships. Every single government entity that has a public pension system. And we actually have four public pension systems, so all of them have an unfunded liability to a certain dollar amount.

Henderson:                        So, is it such an, in your view, an unfunded liability that there needs to be changes in benefits?

Mosiman:                            I will not go that far because I know I'm not a policymaker and I want to make sure that the information coming out of my office remains solid so people can trust the information. And right now with our independence, we have that.

Yepsen:                                Mr. Sand.

Sand:                                     This is one area where we agree. It is not perfect, but it's in much better shape than most states.

Pfannenstiel:                     We've talked a lot about independence and how important that is for either of you, should you be elected to this role. So, Ms. Mosiman, I want to know in what cases have you felt that you have stood up to governor Terry Branstad or Governor Reynolds to to showcase that independence from the leader of your own party?

Mosiman:                            Okay. Um, specifically speaking to things that would be closely tied with the governors, I would look at the budget analysis, specifically the first three in which we were saying the budget. We had a concern because they were using surplus carry forward dollars to balance the budget. And that's not a good budgeting principle. And that shouldn't be used in any government entity. So we did communicate that both to not only the governor's office but to our General Assembly members as well as to the general public. So those are the things that we have talked about. I also referenced avoiding the use, or avoiding multi-use accelerating financial commitments. We had two laws that took effect shortly after I became your state auditor. One was the property tax reform and one was the education reform. Both had a multi-use, multi-accelerating financial commitment, which again is not a good budgeting principle. And both of those things, they have diminished over the years.

Pfannenstiel:                     And Mr. Sand, how would you maintain that independence if a governor Hubbell were to be elected to office?

Sand:                                     You know, I'm very proud of my record at the Attorney General's office. The Iowa film office tax credit scandal happened under a Democratic administration. We prosecuted every one of those single cases. I worked on all of them. There is a county official, Democratic official, in Webster County that today is a convicted felon, and who can't vote for any Democrats. Because the crime that that person committed, I felt was worthy of a felony conviction. I didn't treat them differently just because they're a Democrat. We can have a conversation about whether or not felons should lose the right to vote, but the law is what the law is, and I didn't treat them differently just because of their party affiliation.

Yepsen:                                Mr. Sand, I want to turn to local governments for a minute. Um, we always hear these stories of some local official stealing some small amount of money. Can Iowans be confident? How will you use the office to put some confidence in Iowans about the condition of their local finances?

Sand:                                     I think that's a really good question, and I think there's a lot of room for improvement in the office in that regard. Uh, most of those embezzlement cases ended up on my desk as the chief financial prosecutor in Iowa. So I've handled a great deal of them. And what you often see,

Mosiman:                            Five.

Sand:                                     I've had five trials. I've handled over 30 cases from your office, uh, as my, as in my work at the attorney general's office. Yeah, five trials, 30 cases. What you see is people who have the trust of their community and who are encouraged, uh, by that trust to break that trust. And what we need to have, I think, is more transparency in the office and an office that's more willing to dig into people's ability to hold that trust.

Yepsen:                                Ms. Mosiman, how do you respond?

Mosiman:                            Well, we have, we have actively engaged in this. Number one, I would, I implemented the city municipal examination law. That was the first thing I had to do as a state auditor. Took effect right after I became the state auditor. We've also issued a initiative, started in January, the fraud reduction program. We're very proud of that, because we recognize these cities, they elected officials specifically. They're elected because of expertise in areas other than government finance. But we as the state auditor's office, we can showcase to them how they can provide oversight and accountability and transparency, and we can also give them red flag indicators if fraud could be taking place.

Yepsen:                                Mr. Sand, we've got just a few seconds left. Your critics say you're just using this race as a stepping stone to a US Senate seat. Is that true or not?

Sand:                                     Uh,

Yepsen:                                Will you serve out your term?

Sand:                                     Yeah, that's crazy. I've never been elected to anything, and anyone who's listened to me talk about this office gets an understanding of how excited I am to hold it if I win this race. I think there's a lot of improvements to be made.

Yepsen:                                Thank you both for taking time to be with us today.

Mosiman:                            Thanks for having us.

Yepsen:                                I'm sorry we're out of time.

Sand:                                     Thanks.

Yepsen:                                And thank you for joining us. We'll be back with another edition of Iowa Press next week at our regular times, 7:30 Friday night and noon on Sunday on IPTV's main channel with a rebroadcast Saturday morning on our .3 World channel. For all of us here at Iowa Public Television. I'm David Yepsen, and thanks for joining us today.

Voiceover:                          Funding for Iowa Press was provided by Friends, the Iowa Public Television Foundation. The Associated General Contractors of Iowa, the public's partner in building Iowa's highway, bridge and municipal utility infrastructure. I'm a dad. I am a mom. I'm a kid. I'm a kid at heart. I'm a banker. I'm an Iowa banker. No matter who you are, there is an Iowa banker who is ready to help you get where you want to go. Iowa bankers, allowing you to discover the genuine difference of Iowa banks.

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