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Report reveals source of secret settlement funds

Published: Wednesday, April 2, 2014 11:16 a.m. CDT

DES MOINES (AP) — The revelation from Gov. Terry Branstad’s office that money from state agencies was used to pay secret settlements for fired workers prompted one lawmaker on Tuesday to question whether the funds have been misappropriated.

Sen. Steven Sodders, D-State Center, said an outside investigation may be needed to determine whether laws were broken and charges should be filed. More than 320 state workers have entered settlement agreements since the Republican governor took office in 2011, and more than two dozen were asked to sign confidentiality agreements. The total paid exceeded $500,000.

“It’s getting almost to the point with these hush money settlements where I believe we need to have a special prosecutor to come in and make it fair and determine whether there should be some criminal action to it,” he said.

Five settlement agreements came from the Iowa Department of Administrative Services and were approved by the agency’s director, Mike Carroll. Money for four came from the agency’s utilities fund, while the fifth was funded by the energy program budget, according to documents provided by the agency.

Three agreements at the Department of Human Services were funded by the agency’s operations budget, while various accounts, including operations and discretionary funds, were used for settlements at the Department of Public Health, the Alcohol Beverages Division, The Department of Natural Resources, Iowa Workforce Development, and the Veterans Home.

“I think it shows the length that these directors went to hide what they were doing,” Sodders said. “I think Iowans would say, ‘Wait a minute, you’re taking money out of the utility budget to pay these hush money deals so no one knows about it?”

Hearings are scheduled this week for department directors to explain the agreements and payments, and for former employees to tell their stories.

“The goal of the hearings is to shed some light on who was involved in making these secret agreements, who approved the funding, and how the Branstad administration was able to find this money in supposedly tough budget times,” said Democratic Sen. Janet Petersen, who chairs the Senate Government Oversight Committee and requested the information from the agencies.

Branstad signed an executive order last week prohibiting future confidential settlement agreements. The Republican said he knew nothing about the practice until it was reported in the Des Moines Register last month. He called confidential agreements ill-advised and unacceptable and said each department independently authorized its own agreements.

“There’s no mastermind behind this,” he said Monday. “These were mistakes made contrary to the policy and commitment of this administration to openness and transparency.”

He noted that previous administrations also have signed confidentiality agreements.

Eight settlements at the Department of Administrative Services were approved while Democratic Gov. Chet Culver was in office, according to documents released Monday by the agency.

Culver said those agreements were signed as part of the state’s grievance process, strictly following state law. Under Branstad, Culver said, many of the workers were targeted to be fired under completely different circumstances.

“We worked through appropriate channels and never made any secret deals,” Culver said. “He needs to stand up and take full responsibility and stop pointing fingers at everybody else. He’s in his 20th year in that office and it’s laughable for him to try to make any comparisons to our administration.”

Culver was defeated by Branstad in 2010, after one term as governor.

The top union official at the American Federation of State, County, and Municipal Employees local said it’s no coincidence the restructuring layoffs purged many Democrats from the state payroll. But Branstad, who is seeking re-election in November, flatly denies politics played any role.

“People can make all kinds of accusations but the truth is I know my responsibilities as governor, as chief executive,” he said. “I don’t know every detail of what goes on in state government, but when I become aware of it I then try to get all of the facts and then make an appropriate thoughtful decision in the interest of the people and the taxpayers of this state.”

Republican legislative leaders believe Senate Democrats are trying to keep the issue high profile to help Sen. Jack Hatch, the Des Moines Democrat running against Branstad.

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