Iowa risk pool, under fire for travel, seeks to block audit

IOWA CITY, Iowa (AP) — A group that insures local governments across Iowa is going to court to try to block the state auditor from reviewing its spending, including on board members’ travel to out-of-state vacation destinations.

The Iowa Communities Assurance Pool, which is owned and funded by nearly 800 cities, counties and other governments, argues in a lawsuit filed this week that it is not a “governmental subdivision” and that State Auditor Rob Sand has no authority to examine its finances.

The legal action means that taxpayers will essentially cover the costs of an attempt to keep some of the pool’s spending records away from public scrutiny.

Sand, a Democrat serving his first term as auditor, said Friday that the pool's refusal to provide records he is seeking “raises serious questions.”

“We look forward to fighting for taxpayers' right to know what is happening with their money,” he said.

Sand’s office began reviewing the pool’s finances in October after The Associated Press reported that its directors have routinely held public meetings at vacation resorts in Florida every February and in Michigan every August.

Those trips, which date back at least a decade, include several to islands off the coast of Florida and in Lake Michigan, and activities such as winery tours. Board members have also tripled their daily pay since 2010 to $300 for attending those meetings, which cost thousands of dollars in public funds but are virtually inaccessible to taxpayers.

The risk-sharing pool was formed in 1986 to offer liability and property coverage for local governments that were unable to afford the high cost of traditional insurance.

Pool leaders say they have been successful in offering coverage at fair and stable prices and serving the pool's membership, which includes 75 of Iowa's 99 counties and hundreds of cities and local fairs. Local governments paid the pool $38 million in premiums last year.

Citing AP’s reporting, Sand told the pool in October that it would be in the public interest for his office to review its spending since 2016. He said he wanted to determine that the payouts had a public purpose and complied with state laws.

Sand issued an investigative subpoena seeking its records last month, after ICAP provided only some of the information he requested and disputed his authority.

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Its Dec. 30 petition filed in Polk County seeks a court order to void the subpoena and to declare that Sand does not have jurisdiction to conduct the review.

The case may hinge on whether the pool is a “governmental subdivision.”

State law gives Sand’s office the power to investigate the spending of “governmental subdivisions,” including cities, counties, and several other entities.

But the law does not mention ICAP, which calls itself a nonprofit local government risk pool. The group’s membership elects its seven directors, which has been led for years by retired West Des Moines official Jody Smith and includes state Rep. Michael Bergan.

The AP’s scrutiny of the board's spending and travel prompted several changes. The board cancelled its planned February meeting in Florida and withdrew a $1,000 deposit it had put down to reserve The Inn at Bay Harbor, Michigan — a “Lake Michigan paradise” — for its August 2020 meeting.

The board’s vice chairman, Gary Mahannah, dropped his bid for re-election amid the controversy. The board also promised to begin streaming audio of its meetings online beginning next week, posted its recent annual financial statements and pledged to undertake other reforms.

The pool resisted the AP’s request for copies of recent settlement agreements showing how much it has paid to resolve lawsuits against members. After erroneously claiming they weren’t public records, Smith later said it would cost $22,000 to obtain the documents.

The Iowa Court of Appeals ruled last year that the pool performs government functions and is subject to the open records law, saying, “The public has an interest in knowing how public monies are being expended.”

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Follow Ryan J. Foley on Twitter: https://twitter.com/rjfoley

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