Committee Report Calls For Privatizing Court Debt Collection After Fund Errors

Republicans on the House Government Oversight Committee approved the committee’s report Tuesday recommending an independent audit and transfer of the judicial branch’s court debt collection system to an outside firm.Rep. Charley Thomson, R-Charles City, authored the committee report investigating the misallocation of $27.5 million in court debt funds caused by programming errors in previous years.The Iowa Judicial Branch’s case management system was the subject of scrutiny during the 2025 legislative session as well, after lawmakers and the public learned about the incorrect distribution of court debt money. The misallocations were from seven state funds, including the Victim Compensation Fund, between fiscal years 2021 through 2024.When the House committee met with officials from the Iowa Judicial Branch and State Court Administration in April 2025, officials said these errors were caused because of programming errors introduced after state lawmakers passed measures that changing the state’s court debt collection and distribution systems in 2020 and 2021.Thomson said in Tuesday’s meeting that the problem is not that a programming error occurred — but that misallocation of funds was not disclosed and remedied soon after it was found.“This is not a story about a computer glitch,” Thomson said. “Computers make mistakes. People fix them. That’s not what happened here. What happened here is that when the judicial branch discovered a massive problem with public funds, they made a choice. They chose silence over transparency.”Judicial branch officials said the National Center for State Courts (NCSC) was contracted to review and make recommendations on how to address the funding and legal issues caused by the programming error. State Court Administrator Robert Gast said in a December 2024 statement the coding problems were corrected in the case management system as of Nov. 22.The report, put together by Thomson, states that the NCSC report and later analysis by the tech firm Zirous have identified “severe deficiencies in the Judicial Branch’s financial management systems,” with the NCSC report identifying programs dating back 30 years. However, as the NCSC report explicitly states, it is “not intended to constitute an audit or review of accounting practices, internal controls, or financial activity.”“During this period, the Judicial Branch attempted to quietly fix the problem itself, hiring consultants who were not certified public accountants and who explicitly stated they could not audit financial practices,” the House Government Oversight Committee report states. “No independent, comprehensive forensic audit has ever been conducted by the State Auditor or anyone else. To this day, no one can state with credible certainty and personal knowledge the precise date the errors began, whether they have ended, or whether any funds were improperly diverted to private hands.”Auditor Rob Sand released a report on the issue in December 2024, but Republican lawmakers criticized the auditor — the only Democrat to hold statewide elected office, who is running for governor in 2026 — that his office did not adequately perform its duties on government accountability. The Iowa Department of Transportation first alerted the auditor’s office about financial irregularities in the court debt system in 2022, but the subject was not mentioned in the annual audits of the judicial branch in fiscal years 2021 or 2022.Sand told members of the Government Oversight Committee in April 2025 that his office did not release an audit and further information about the issue earlier because the misallocation was caused by a coding error, which the auditor’s office does not have staff able to address.Thomson, in comments at the meeting and in the report, criticized Sand’s characterization of the subject.“When a state entity has misallocated more than $25 million in public funds, when that entity’s own staff admits they do not know if their programming ‘accurately reflects what is in the Iowa Code,’ and when that entity solicits help from the State Auditor’s Office, and when the State Auditor’s Office replies that it will ‘take it from here’ — that is precisely an audit issue,” the report states. “The Auditor’s office had the opportunity, the resources, and the moral obligation to investigate. It chose not to.”On Tuesday, the auditor’s office released the following statement from Sand: “No money was lost, and no services were delayed. This is like the bank putting money meant for your checking account into your savings account. That is what the Judiciary did. The Judicial Branch has taken full responsibility for its error. This report rehashes old, debunked lies in an election year and is the same politics that Iowans hate.” Rob Sand, State AuditorThe Iowa Judicial Branch provided this statement: “The judicial branch takes full responsibility for the misallocation and is committed to continuing to collaborate with the other two branches of government and other effected stakeholders to resolve this issue and to develop a path forward to improve and simplify court debt distribution. While we have not had an opportunity to fully review the report and comment on the recommendations, we appreciate that the report acknowledged there was no criminal intent or personal enrichment.”In addition to presenting findings, the report also laid out several recommendations for action on addressing similar issues in the future. The report called for an independent forensic audit of the misallocated funds — “a real one by qualified accountants who can actually trace every dollar,” Thomson said.“It recommends taking court debt management away from the institution that has proven it can’t handle the job,” Thomson said. “And it recommends new laws requiring immediate disclosure when something like this happens again. Because it will happen again somewhere, someday. The question is, the next time, will we find out about it in three weeks, three days, or three years?”While the report was adopted and approved by the committee, the recommendations are not codified by this action — suggested actions would have to be implemented by the Legislature or by other state entities.Democrats did not approve the report. Rep. Larry McBurney, D-Urbandale, asked why Attorney General Brenna Bird and Iowa Department of Management officials were not called in for questioning by the committee as the misappropriations included funds from the AG’s office and the general fund. He also said while he agreed with many of the recommendations made in the report, he pushed back on the idea of moving the court debt collection system to a non-government entity.“The only concern I would have with the moving of the court fee system to a third party is — of course, the thing we talked about the most up here — money,” McBurney said. “I (don’t) see how we’d end up having to pay for that. So for that reason, I feel like there needs to be more work done within the report.”Iowa Capital Dispatch is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Iowa Capital Dispatch maintains editorial independence. Contact Editor Kathie Obradovich for questions: info@iowacapitaldispatch.com. Follow Iowa Capital Dispatch on Facebook and Twitter.