Whether in state government or at home, a deal is a deal

A homeowner calls a contractor to complete a home renovation job, accepts the estimated price, and has the work done — only to get a bill for twice the agreed-upon price! But this one has a twist: the owner is your state government, they are paying with your tax dollars, and they agreed to the cost doubling with no justification at all. All the facts follow.

When the legislature and governor passed Iowa’s school vouchers law nearly two years ago, they allowed no oversight of how the money is spent and only banned one use of it: no rebates for parents. But while your State Auditor’s Office is recently limited in what documents we can look at thanks to the legislature passing and governor signing another new law, we can still do basic things like look at contracts the state signed. And that’s how we found out the following.

What our staff did find was the contract the Department of Education signed with a company called Odyssey, a well-connected New York-based firm that specializes as a pass-through entity for public dollars going to private schools, got amended just a couple months after being signed. When our staff asked questions, the department stonewalled for over six months.

Finally, they coughed it up. The administration agreed to double the cost to taxpayers without any additional obligations on Odyssey — and no justifications were provided to our office for the change. On top of it all, the department didn’t follow its own internal procedures for contract changes and amendments.

The new contract added a new section called variable fees. It gave Odyssey the 2.5-3.5% customary to cover payment fees, 25 cents per transaction, and 25 basis points per dollar spent in the program. Setting aside the first two items, the last one alone will double the middleman’s take of your tax dollars. That’s using expected expansion numbers from the nonpartisan Legislative Services Agency. The biggest expansion will be next year, when the income restrictions are removed and every family in Iowa that was already paying for private school with their own money can use yours instead.

You wouldn’t accept this kind of bait-and-switch from a contractor without a good explanation — yet that’s exactly what the Iowa Department of Education did. Our job as the taxpayers’ watchdog is to sniff around and bark when necessary. We barked when we found this doubling of the cost to taxpayers because taking good care of Iowans’ hard-earned money matters.

When the school vouchers law was being considered in early 2023, I had a conversation with a lobbyist who was working very hard to get the bill passed. I had a very real concern about the lack of oversight of the tax dollars being spent in the proposed legislation — I thought for sure there’d been a mistake in the process of writing the bill, so I went to them and said, “You know this only has one restriction on the money once it’s paid as tuition, and there’s zero oversight of taxpayer dollars.” The reply was, “We know. We don’t want public oversight of private schools.”

Then don’t give them public dollars.

A big part of what our office does is ask questions. That’s not because we like interrogating folks — though, some of us do — it’s just what auditing standards require our professional staff to do. More often than they used to, our questions have gone unanswered for longer stretches of time. What are they afraid of? The truth?

When public servants see their leaders behave in ways that indicate they don’t care about oversight or accountability to the taxpayers, that has a trickle-down effect. I hope we’re better than that, but the new limits on what we can audit sure set the tone.

I despise the way partisan politics can poison government’s ability to function. That’s why I’m quick to defend people with different political views than my own when they’re right and am not afraid to go after people in my own party when they’re wrong. Right and wrong only matter if we’re willing to stand by them even when it’s hard. And that should include telling a greedy middleman, “We had a deal,” and demanding they stand by it to protect taxpayers.

Rob Sand is Iowa State Auditor