Audit finds possible double dipping in Iowa’s Sixth Judicial District

PENSION PROBLEM? A state audit may have a double dipping scheme.

DES MOINES, Iowa — The recently released state audit of Iowa’s Sixth Judicial District’s Department of Correctional Services found the department had inappropriately spent more than $500,000 over a four-year period to support a nonprofit organization, Community Corrections Improvement Agency. CCIA was founded in 1991 to support the work being done by the Sixth Judicial District.

But since the district was supporting CCIA instead, Iowans may well wonder what the district got out its relationship with that agecy. One possible answer contained in the audit report is troubling: it appears the district’s unusual and close relationship with CCIA allowed a retired employee to circumvent rules established by the Iowa Public Employees Retirement System regarding “double dipping.”

Double dipping is common term for a government employee getting paid for his or her current job while at the same time receiving a pension from a previous government job. While a retiree receiving a pension from IPERS may work for a state agency, if the retiree is under 65, his or her pension payments will be reduced 50 cents for every dollar over $30,000 he or she earns.

(There is an exemption for elected officials. Governor Terry Branstad was only 64 when he was sworn in for his current term, but he still received his full pension from his previous terms as governor in the 1980’s and 1990’s in addition to his salary.)

In 2012, state lawmakers examined the issue of double dipping, and both Democrats and Republicans agreed it wasn’t a serious problem in Iowa. But as the audit report revealed, what’s true for the rest of Iowa isn’t necessarily true for the Sixth Judicial District.

Cindy Engler, assistant director for the district, retired on May 31, 2011. She began working for CCIA on July 1, 2011, on a one-year contract. At CCIA she performed duties she had also done while working for the district.

Normally, such an arrangement would not have attracted an auditor’s attention. It was where the money for Engler’s salary came from that raised a red flag.

The district reimbursed CCIA for the costs associated with employing Engler. Both the audit report and an earlier internal review conducted by the Iowa Department of Corrections concluded “this arrangement between 6th District and CCIA [had] been designed to circumvent the IPERS re-employment rule.”

In other words, Engler was being paid by the district to perform duties normally done by a district employee, but since her contract was with CCIA instead of the district, her pension was unaffected.

According to the audit report, CCIA paid Engler $47,000 over the course of her contract. The DOC internal review estimated the amount paid to Engler at $51,207.

Using the figure from the audit, Engler’s pension would have been reduced by $8,500 during the year she worked for CCIA if she had been directly employed by the district. If the DOC figure is correct, the reduction would have been $10,603.50.

The auditors write “we have filed a copy of this report with IPERS for its review.” IPERS will be responsible for determining whether the arrangement constituted double dipping.

“Cases like this are very rare,” IPERS Director of Communications Judy Akre told Iowa Watchdog. “[Double dipping] is especially difficult to uncover if a former employee (IPERS retiree) appears to be employed by a non-government entity.”

IPERS will review the audit and conduct its own investigation.

“Assuming there is a violation of an IPERS statute or rule, IPERS will thereafter take remedial action pursuant to its statutes,” Akre said. “One remedial action may include the referral to the appropriate law enforcement agency and/or county attorney to determine if a crime has been committed.”

Iowa Watchdog reached out to CCIA for comment on the audit, but hasn’t heard from its spokesperson.

Sixth Judicial District Director of Correctional Services Bruce Vander Sanden assured Iowa Watchdog the district hasn’t contributed to paying Engler’s salary since he became director. This, however, wasn’t really an issue, since Engler’s employment contract with CCIA expired on June 30, 2012 and Vander Sanden didn’t assume his current position until May 2013.

Vander Sanden declined to comment on actions taken by the district’s previous director, Gary Hinzman.

Gary Hinzman served as district director from 1989 to May 2013. He is currently executive director of CCIA, a position he has held since the organization was founded in 1991.

In addition to filing a copy of its report with IPERS, the state auditor has also filed a copy of the report with the Iowa Attorney General’s Office.

Contact Paul Brennan at pbrennan@watchdog.org. This story originally appeared on Watchdog.org.