Iowa Corrections Director John Baldwin painted the 6th Judicial District Department of Correctional Services as a rogue agency that has long flouted state rules and now must be reined in after a state audit revealed more than $700,000 in misspent funds.
"We're committed to making sure we get the 6th District's financials absolutely flawless, Baldwin told the state's Board of Corrections Wednesday.
The audit released last week identified $776,000 in improper disbursements from the district that provides parole, probation and other community-based corrections in six Eastern Iowa counties, including Linn and Johnson.
The bulk of the improper payments -- $563,000 – were made on behalf of the Community Corrections Improvement Association (CCIA), a nonprofit started by the district’s former director. This included $444,000 in CCIA payroll and $119,000 for office space used by CCIA. The non-profit group had also been using state vehicle and cell phones for free, the audit showed.
Gary Hinzman, who led the district for 24 years until he retired in May, founded CCIA in 1991 and is still a board member. The non-profit has founded several 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.
The co-mingling of the district’s and CCIA’s money was the major problem identified in the 64-page audit. The report has been sent to the Iowa Attorney General, who will decide whether to file criminal charges, Baldwin said.
Baldwin requested the audit in April 2012, soon after Hinzman sought $800,000 in additional state money to help the district stay afloat through the end of the fiscal year. An internal audit showed $200,000 that balanced the district’s books for fiscal 2011 did not exist, Baldwin said.
“This is not the first time we’ve had problems with the 6th District,” he said.
The Department of Corrections halted previous district practices of giving managers $500 clothing allowances and charging offenders for CCIA services they did not use, Baldwin said.
Among problems identified in the audit was poor oversight by the boards of CCIA and the district, which have three common members.
“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,” auditors wrote.
John Hannaford, a division director who oversaw the district's finances, left the agency Aug. 30, 2012.
Baldwin and Bruce Vander Sanden, the district’s new director, said they have already taken steps to separate the district from CCIA. CCIA employees who were getting state health and dental insurance have been removed from that list. Vander Sanden sold about half of the district’s 39 cars, which CCIA had been using for free.
District officials have also changed their financial reporting to make it easier for board members to oversee the decisions.
Baldwin had these words for corrections boards across the state: “Trust us to a certain degree, but you have to make sure the numbers make sense,” he said.
CCIA Board President Steve Ovel told The Gazette last week that the nonprofit would need to evaluate whether it can continue all of its programming.
District officials will discuss the audit at a public meeting Friday from 1-3 p.m. in the board room at the Faches Center, Correctional Services Complex, 951 29th Ave. SW, Cedar Rapids.