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Senate Oversight Committee OK’s reforms to ‘clean up state government’

Iowa capitol
Iowa capitol

DES MOINES – ­­The Senate Oversight Committee met today in Des Moines and approved recommendations in response to a series of revelations that started when it was reveal that fired state employees were paid for their silence.

“These reforms are intended to fix underlying problems in state government, problems which—if not addressed—could damage the effectiveness of state government and leave the door open to similar scandals in future Republican or Democratic administrations,” said Senator Janet Petersen, chair of the Senate Oversight Committee.

The committee voted to recommend that the next session of the Iowa Legislature consider these  reforms:

  • A ban on secret settlements and hush money
  • Expanded whistleblower protections
  • Anti-cronyism measures
  • Reform of the state’s “do-not-hire” database
  • A ban on no-bid contracts for state projects
  • Increase accountability in state infrastructure projects
  • Protect Iowans right to fair hearings by preventing political appointees and at-will employees from supervising or evaluating judges
  • Restore integrity to Iowa’s unemployment trust fund by appointing trusted and transparent leadership
  • Require that the Legislature be notified when the Governor receives reports of founded workplace violence in state agencies.

“I’m proud of the work we did and want to thank our witnesses and legislative staff,” said Petersen.  “I believe our findings support a number of reforms that will improve the functioning of state government, regardless of who is serving as governor.”

Senator Petersen’s opening statement can be found below and online at:http://www.senate.iowa.gov/democrats/petersen-reforms-that-will-clean-up-state-government/.

The Committee’s recommendations can be found below.

—————-

Janet Petersen, State Senator, will lead the hearing
Janet Petersen, State Senator, will lead the hearing

“Reforms that will clean up state government”

Prepared Statement by Senator Janet Petersen, chair, Iowa Senate Oversight Committee –

Last spring, when the Iowa Senate debated reforms related to various scandals involving state government, I said “Iowans deserve clean government and Iowa taxpayers deserve answers.”

Here are some of the questions in need of answers:

Why did the Department of Administrative Services and several other state agencies pay former employees to for their silence?

Why did Branstad administrators back away from millions of dollars in federally funded improvements for veterans at the Iowa Veterans Home?

Why were state employees afraid to blow the whistle on illegal or improper practices?

Why were founded cases of violence in state workplaces swept under the rug?

Why did judges deciding unemployment cases feel pressured to rule against workers?

Governor Branstad has shown little interest in answering these questions.

That’s why the Senate Oversight Committee worked to discover the rest of the story, hearing sworn testimony and gathering documents from a diverse collection of people.

Based on what we learned, we have compiled a comprehensive set of reforms to clean up state government.

These reforms are intended to fix underlying problems in state government, problems which—if not addressed—could damage the effectiveness of state government and leave the door open to similar scandals in future Republican or Democratic administrations.

I expect the Iowa Legislature will debate legislation based on these proposed reforms next year.  It is my hope that Republicans and Democrats will set aside partisan differences and take the steps necessary to get Iowa’s state government back on track and prevent scandals like this from happening again.

Here is a summary of our proposed reforms

Ban the use of secret settlements and hush money in all branches of government.  Eliminate slush funds used by departments and agencies to disguise settlement payments.  All state employment settlements should be transparent and subject to legislative oversight.

Expand protections for state employees and contractors who blow the whistle on wrongful activities.

Reverse the growing trend of cronyism in the hiring of state employees by requiring all job openings to be openly advertised, transparent and subject to legislative oversight.

Reform the state’s “do-not-hire” database to ensure due process and prevent abuses.

Prevent no-bid contracts on state projects by requiring all state entities to follow formal competitive bidding procedures for projects above $100,000.  Require that architectural and engineering services follow the same bidding and procurement requirements as other construction services.

Increase accountability in state infrastructure projects by requiring that all major infrastructure changes be approved by the Legislative Committee that originally appropriated the money.  In addition, reinstate the Vertical Infrastructure Advisory Committee and review the state construction cost benefit analysis by the Legislative Service Agency and act on its recommendations.

Take political influence out of the judicial process by ensuring Iowans receive a fair and impartial hearing. Protect the integrity and independence of administrative law judges by preventing political appointees and at-will employees from supervising or evaluating them.

Restore integrity to Iowa’s unemployment trust fund by appointing trusted and transparent leadership and updating or replacing the call-in system for unemployment benefits.

To insure that intolerable behavior is not swept under the rug, require that the Legislature be notified when the Governor receives reports of founded workplace violence in state agencies.

————–

Senate Government Oversight FINDINGs and RECOMMENDATIONs

1) Banning secret settlements and hush money payments

FINDING:  Secret settlements were made throughout state government, including these departments:

  • Iowa Veterans Home
  • Iowa Department of Natural Resources
  • Iowa Department of Administrative Services
  • Iowa Department of Public Health
  • Iowa Department of Human Services
  • Iowa Department of Education

FINDING:  Former DAS attorney Ryan Lamb testified that he discussed putting confidentiality language into settlement agreements with Branstad’s legal counsel, Brenna Findley.

FINDING:  Hush money was given and offered to former state employees.

  • Carol Frank and Dean Ibsen, former DAS employees, testified that they were offered hush money in exchange for a confidentiality clause in their settlement agreements with the State of Iowa.

FINDING:  Governor Branstad and Department of Administrative Services did not provide Iowans accurate information regarding secret settlements, hush money and their costs to Iowa taxpayers.

  • Governor Branstad’s internal investigation team — comprised of the director of DOM, legal counsel and chief of staff — released 24 cases totaling $500,000 on March 18, 2014.  The State Auditor’s report revealed 42 confidential settlements, totaling nearly $700,000.
  • Former DAS legal counsel testified that he notified Branstad’s Chief of Staff and DAS Director that there might be documentation indicating a payment was negotiated in a settlement agreement.  This notification occurred prior to the DAS Director’s testimony before Oversight and the Governor’s news conference denying Ms. Frank’s testimony.

FINDING:  Funds used for settlement agreements were not disclosed to legislators or the state agencies that paid into those funds for their specific purposes.

  • DAS used other state agency funds to pay for settlement agreements that were intended for other uses, such as construction management costs, energy efficiency programs and general operations.
  • A Department of Administrative Services document shows the state used at least six separate accounts to pay more than $500,000 in employee settlements since 2011.

RECOMMENDATION: Ban the use of secret settlements and hush money in all branches of government.

RECOMMENDATION: Eliminate slush funds and the ability of departments and agencies to have a blank checkbook for settlement payments.

RECOMMENDATION:  Create appropriate transparency mechanisms and oversight on state employee settlements.

2) Expanding protections for whistleblowers

FINDING:  Public employees who have blown the whistle on unjust practices in state government do not have adequate protections.

  • The committee received testimony from current and former state employees who were exposed to retaliation through demotion, job reclassification and removal after reporting inappropriate activity in the workplace.

RECOMMENDATION:  Expanding protections for those who blow the whistle on wrongful activities in state government.

3) Outlawing cronyism in hiring state employees

FINDING:  Iowa has hired at least 990 employees since January 2007 without advertising their jobs on a statewide public notification system, thereby allowing state managers to hire their friends instead of the most qualified candidates.

RECOMMENDATION:  Require all job openings in state government to be openly advertised.

RECOMMENDATION:  Create appropriate transparency mechanisms and oversight on newly created state positions.

4) Reforming use of the state “do-not-hire” database

FINDING:  The state utilized a “do-not hire list” without consistent procedures or criteria for due process.

  • Three former employees filed a lawsuit April 28, 2014, claiming the state created “blacklists,” despite multiple warnings by administrative law judges against the practice. They are seeking class-action status that, if granted, could cost the state millions of dollars in settlements.

RECOMMENDATION:  Reform the state’s  “do-not-hire/blacklist/database” to ensure due process.

5) Preventing no-bid contracts on state jobs

FINDING:  An architecture firm was hired outside of normal procurement guidelines for work related to the Iowa Veterans Home.

  • A three paragraph request for proposal was released with a five-day window for response.  The RFP did not name the project.  The recipient of the contract received millions of dollars’ worth of work from the state of Iowa.

RECOMMENDATION:  Require all state entities to follow formal competitivebidding procedures for construction projects above $100,000, includingpreliminary architectural and engineering services.

RECOMMENDATION: Require architectural and engineering services adhere to the same level of bidding and procurement requirements as any other construction service.

6) Increased accountability in state infrastructure projects

FINDING:  The Iowa Veterans Home (IVH) master plan was approved by Iowa Legislature and the federal government to draw down federal money.

FINDING:  The Iowa Veterans Home unilaterally redesigned and repurposed construction funding that resulted in the state of Iowa losing federal funds and jeopardizing Iowa’s  federal match for future projects.

FINDING:  Executive Order 79 eliminated Iowa’s Vertical Infrastructure Advisory Committee, which provided transparent, knowledgeable and nonpartisan recommendation for infrastructure spending.

FINDING:  The state has lost internal oversight on millions of tax payer dollars of state construction projects.

RECOMMENDATION:  Require all major infrastructure changes to be approved by the Legislative committee that originally appropriated the money.

RECOMMENDATION:  Reinstate the Vertical Infrastructure Advisory Committee.

RECOMMENDATION:  Review the state construction cost benefit analysis by the Legislative Service Agency and act on its recommendations.

7) Take political influence out of the judicial process

FINDING:  The U.S. Department of Labor (DOL) had to intervene when Iowa Workforce Development Director tried to reclassify a merit judicial position to an at-will position.  The DOL noted this violated established legal principles that say judges must be insulated from political influence.

FINDING:  The Iowa Workforce Development Director, a political appointee, is currently the direct supervisor of the unemployment appeals Administrative Law Judges.

FINDING: The former Public Employment Relations Board chair testified that Governor Branstad’s office pressured the Board to hire an unnamed administrative law judge.

RECOMMENDATION:  Review existing Iowa law regarding the adjudicative process to ensure Iowans receive a fair and impartial hearing.

RECOMMENDATION: Prohibit all political appointees and/or an at-will employees from supervising or evaluating administrative law judges to preserve their integrity and independence in decision making. 

8) Restore integrity to Iowa’s unemployment trust fund

FINDING:  Iowa’s Workforce Development’s call-in system for unemployment claims failed during the week of March 8, 2014.

FINDING:  Iowa Workforce Development (IWD) did not have accurate information about which Iowans should or should not receive unemployment payments for that week.

FINDING: The Director of IWD made the decision to issue payments to all those who made claims the previous week.

FINDING: A memo was sent to IWD fraud investigators from their manager threatening repercussions  if they questioned or disclosed the payment decision.

FINDING:  IWD did not provide an accurate accounting of the costs and magnitude of the unemployment system failure for the week of March 8, 2014.

FINDING:  The Department manually entered 21,706 claims into the system for a total costs of more than $7.6 million.  The Department has not yet provided the Senate Oversight Committee with the total amount of charge backs to Iowa employers for the system failure on March 8, 2014.

FINDING:  IWD did not provide adequate staffing for IWD fraud investigators for over four years, which resulted in not fulfilling work requirements.

FINDING: Regions of the state of Iowa were without unemployment fraud investigators for nearly four years.

FINDING:  Fraud investigation cases dropped without adequate investigator staffing levels between 2010 and 2014.

RECOMMENDATION:  Iowa Workforce Development and the Unemployment Trust Fund must have honest,  transparent leadership.

RECOMMENDATION:  Iowa Workforce Development needs to work with the Legislature to develop a plan to update or replace their call-in system for unemployment.

9) Restore Confidence in Government Operations

FINDING:  Department of Administrative Services controls several areas of governmental operations, including general accounting, purchasing and procurement, construction management and human resources hiring, firing, and workplace investigations.

FINDING:  The Oversight Committee heard testimony that DAS has become ineffective at conducting confidential workplace investigations.

FINDING:  The Oversight Committee received testimony that Governor Branstad’s office received founded workplace violence investigation reports and he failed to respond.

RECOMMENDATION:  The Legislature should be notified when the Governor receives reports of founded workplace violence reports in state agencies.

RECOMMENDATION:  The Legislature should reexamine the duties of DAS to reign in its ability to control and hide unacceptable government practices from the legislature and Iowa taxpayers.

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