State audit shows $770,000 in improper disbursements by Sixth District Correctional Services

Bulk of audit focuses on disbursements by Community Corrections Improvement Association

Erin Jordan
Published: January 10 2014 | 8:42 am - Updated: 29 March 2014 | 1:53 am in

A state audit released Friday shows $776,000 in improper spending by the Sixth Judicial District’s Department of Correctional Services, which provides community-based corrections in six eastern Iowa counties including Linn and Johnson.

State Auditor Mary Mosiman identified “significant concerns” with the relationship between the district and a corrections non-profit started in 1991 by the long-time district leader Gary Hinzman.

“The lack of appropriate fiduciary oversight and the failure to ensure implementation of adequate controls over budgeted expenditures resulted in the District operating in a deficit position,” the 64-page audit states.

The audit requested by Department of Corrections Director John Baldwin covered the period of July 1, 2008, to June 30, 2012.

The bulk of the improper disbursements -- $563,000 – were paid on behalf of the Community Corrections Improvement Association. This included $443,900 in payroll costs for some CCIA management and $119,000 in district office space for CCIA, auditors found.

The district also made $170,000 in improper vacation payouts to former employees and $40,000 in vacation paid before it was earned, the report states.

Hinzman started CCIA with the goal of seeking private grants that couldn’t be tapped by the state. CCIA started a number of innovative programs, including Children of Promise, which provides mentors for children with a parent in prison, sponsors a foster grandparent program for at-risk kids and runs a youth-leadership program.

Hinzman was district director for 24 years before retiring in May.

The audit was requested in 2012, soon after Hinzman requested an additional $800,000 to keep the district afloat through the end of the fiscal year, the audit states. The district had been in the red since late 2010, with a deficit of $206,000 at the end of June 2011, according to auditors.

Baldwin ordered an internal review, which showed the district's finances were interconnected with CCIA's.

In addition to the disbursements, the audit showed CCIA's employees approximately 70 employees were included on the district's payroll so they could receive the same health and dental benefits. CCIA staff also used district vehicles at no cost.

The State Auditor recommended district leaders and the board provide closer oversight of financial decisions. The district should also separate its finances from CCIA, ensuring each entity pays its own operating costs.

State of Iowa's audit of the Sixth Judicial District (PDF)

State of Iowa's audit of the Sixth Judicial District (Text)

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