DES MOINES – Director Mike Carroll denied the Iowa Department of Administrative Services paid laid-off employees “hush money” to keep their settlements secret.
He also said the department did not break any laws in executing confidentiality agreements that ran afoul of Gov. Terry Branstad’s goals of open and transparent government.
Carroll told members of the Legislature’s Government Oversight Committee on Thursday that he “made a mistake” by allowing confidentiality clauses to be included in employment settlement agreements. He apologized that the provisions — although legal — did not comply with the governor’s transparent government initiatives and pledged “it will not happen again.”
Carroll’s insistence that money was not included in settlement negotiations in exchange for employees’ silence directly contracted testimony offered a day before by former Department of Administrative Services workers who insisted they were offered extra payment if they agreed to include a confidentiality clause in the agreement.
After Thursday’s committee hearing, Carol Frank, a laid-off engineer who received a $77,326 settlement that included a confidentiality clause, reiterated her contention that the department boosted her settlement by $5,000 for her promise to keep the agreement secret.
“It did happen. I remember I was with my husband in Hy-Vee in the checkout line, and I get this call,” Frank told reporters. She said the offer was made by a former department legal counsel and her agreement and settlement checks were signed by Carroll.
Frank, who listened to the two hours of testimony provided Thursday by Carroll and two other department officials, told reporters, “I think he’s not being entirely truthful, which is a pattern at DAS.”
Carroll was adamant, however, that in the four settlement agreements with confidentiality clauses that he signed, it “never happened” that so-called hush money was part of the deal.
“She was not offered money for a confidentiality clause,” Carroll said of Frank’s settlement. “She was offered money to settle her grievance that was stated on the face of the agreement itself.” When asked if a department official may have added money for a confidentiality clause, he replied, “No, sir, that just didn’t happen.”
During his committee testimony, Carroll told lawmakers that employee settlements that arose out of a 2011 department reorganization were not “secret” but were a matter of public record that could be accessed via a Freedom of Information request. He said the confidentiality agreements were lawful.
“The payments made were made out of operating budgets because they did not qualify for payment out of the general fund through the Appeals Board,” he said. “The payments made were not hush money, but settlement of specific grievances as evidenced on their face.”
Department officials had conducted a risk analysis that identified a “walk-away number” for each layoff mediation case with a potential cost of up to $4.3 million, Carroll said, but they never reached that amount.
Under questioning, Carroll said that during and after the reorganization, up to a dozen Department of Administrative Services hires were made without advertising the positions because state human resources and Department of Management officials classified them as merit exempt or at-will jobs that did not have to be posted.
The wide-ranging hearing also dealt with state policies and coding systems regarding state workers who are disqualified for future state employment because of past issues arising from their work performance. It also covered private contract agreements that Carroll said could net up to $12 million in savings via streamlined procedures for state construction projects.
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“We’re very skeptical as to whether this is actually saving real money,” said Senate Majority Leader Mike Gronstal, D-Council Bluffs.
Gronstal said legislative Democrats planned to continue investigating the confidential employee agreements and issues related to the Department of Administrative Services reorganization until “we get to the bottom of it.” House Democratic Leader Mark Smith of Marshalltown declared, “We are not going to let the House Republicans sweep Branstad scandal under the rug.”
House Speaker Kraig Paulsen, R-Hiawatha, expressed concern, however, that Wednesday's Senate-only Oversight meeting had the feel of a “campaign event.”
“It’s becoming very clear that Senate Democrats have launched Jack Hatch’s campaign for governor from Senate floor,” said Senate Minority Leader Bill Dix, R-Shell Rock.
Oversight Committee co-leader Rep. Kevin Koester, R-Ankeny, said he was impressed by Carroll’s candor and the way he apologized for the mistake he admitted making, but his Senate counterpart, Sen. Janet Petersen, D-Des Moines, said unanswered questions lingered after Thursday’s hearing.
“We would like to get to the bottom of who authorized the hush money, and I still don’t feel like we’ve got firm answers on that. We’ll follow up and see if we can get an accurate answer on that,” said Petersen, who may seek to schedule more meetings next week.