House panel advances restrictions on state auditor’s access to information

Staff with the auditor’s office told a panel of lawmakers Wednesday that proposed privacy protections passed by the Senate would keep the office from effectively stopping and preventing misuse of taxpayer funding.

Senate File 478, which passed the Senate earlier in March on a 33-16 vote, would prohibit the state auditor’s office from accessing information like a person’s income tax returns, medical records, grades or “other similar information that an individual would reasonably expect to be kept private.” The office would only be able to access those records if the agency being audited agrees with the auditor that the information is necessary in order to conduct an audit.

Iowa Auditor Rob Sand and Democrats have said the proposed restrictions could be retaliation for Sand’s call on the UI Athletics discrimination lawsuit settlement, or because of partisanship. Sand is currently the only Democrat holding a statewide elected office after the 2022 midterm election.

Sen. Mike Bousselot, R-Ankeny, said the purpose of the bill is meant to answer questions raised by the Iowa Supreme Court in 2021 in a case involving the auditor’s office subpoena of University of Iowa records about its utility system lease. The state Supreme Court ruled in favor of the auditor’s office in accessing information.

Bousselot said the real question in the debate over restrictions is “Why does the auditor want access to Iowans’ most private, personal, confidential information even when it is irrelevant to the audit being conducted?”

In a House subcommittee meeting on the bill Wednesday, John McCormally, chief of staff of the Iowa Auditor of State’s office, said claims about auditor’s needlessly accessing people’s medical records or university grades are misrepresenting the auditing process.

McCormally said the office gets access to information protected by federal privacy laws like the Health Insurance Portability and Accounability Act (HIPAA) and the Family Educational Rights and Privacy Act (FERPA) because that information is relevant to ensuring taxpayer funds are being spent correctly through programs like Medicaid or student aid.

The auditor’s office is already prohibited from disclosing that information by federal and state law, he said, as well as by government accounting standards. “This bill does not protect privacy,” McCormally said. “… Instead, what this bill does is give the agency the discretion to determine what information should be audited. That eliminates independence and opens the door to waste, fraud and abuse.”

Sand and auditor’s office staff said the proposed restrictions could also stop Iowa from receiving federal funds that are contingent on audits. Many federal grants, which provide funding for student loans, medical assistance and other programs, require the auditor’s office to audit the agency receiving those federal dollars using generally accepted government auditing standards (GAGAS).

State auditors with the National State Auditors Association wrote a letter to lawmakers saying the bill could prevent the office from conducting audits compliant with GAGAS standards and could lead to losing grants and lowering the state’s bond rating.

Republicans argued the bill is a necessary measure to protect Iowans’ privacy, but Rep. Amy Nielsen, D-North Liberty, echoed concerns from Senate Democrats that this bill was targeting Sand specifically.

“I think this bill is crazy inappropriate for us to be even looking at,” Nielsen said. “If we’re going to do this to the auditor, we also need to do it to the attorney general, and the treasurer, and not just pick on one person. Because, let’s just be honest here, we’re picking on the person in this office, not the office with this bill.”

Reps. Bobby Kaufmann, R-Wilton, said as the bill’s floor manager, he does not believe the changes proposed have anything to do with Sand. But he said moving forward, Republicans will work with the auditor’s office staff and others to draft an amendment addressing some of the concerns voiced in the meeting.

“I think there’s been a lot of points brought up by the auditor’s office and I think there’s been some conversations about some language changes,” Kaufmann said. “I look forward to working with everyone that spoke today on a potential amendment moving forward.”

The bill moves next to the House State Government Committee.