The Iowa Supreme Court will hear arguments on whether the state Board of Regents is allowed to block State Auditor’s Office’s subpoena for the financial records of the University of Iowa’s $1.1 billion public/private partnership.
First reported by the Des Moines Register, while the state agency and transaction at hand aren’t specified in court documents, dates and other information make clear the subpoena is being challenged by the state Board of Regents, and is related to the 2019 public/private partnership between the UI and a French energy conglomerate.
The UI announced the deal on Dec. 10, 2019 between the university and French energy firms ENGIE and Meridiam for a 50-year agreement to operate and maintain its utility system.
As previously reported by The Daily Iowan, the public/private partnership resulted in a $1.1 billion upfront lump sum to the UI. The UI would tap into the endowment for $15 million each year to fund strategic initiatives, which President Bruce Harreld says fills in gaps left by nationwide declining enrollment and underfunding from the Iowa Legislature. The funds will be distributed through one- to five-year grants, which Harreld has said likely wouldn’t involve building projects and facilities.
According to documents filed with the Iowa Supreme Court, State Auditor Rob Sand issued a subpoena in January 2020, intending to learn the identities of investors in the deal and receive other documentation.
Sand first asked for information on the investors in emails to both the UI and the regents, but when the requests were denied, he issued a subpoena, court documents say. The investors were publicized as being 20 percent from Iowa, the auditor’s office’s brief said, but the regents did not turn over the information requested.
Initially, the regents said the information regarding investors was confidential, and would not be made public until the deal had closed.
The regents informed State Auditor Rob Sand of the transaction in 2019 before it was finalized, according to court documents. The regents now argue the subpoena is invalid and has not yet produced the documents requested by the auditor’s office.
A Polk County District Court sided with Sand in February, charging the regents to comply with the subpoena, but the regents filed an appeal. The regents argue that the subpoena was not issued as part of a regular annual financial audit of the agency, or as a performance investigation.
“In his December 20, 2019 email to the Agency, Auditor Sand directly indicates that he was claiming to be engaged in a ‘financial audit,’” the agency’s final brief says. “Then, in his January 8, 2020 subpoena, Auditor Sand indicates that the subpoena is in relation to an audit of the Institution as a whole, rather than a specific performance audit of the Transaction.”
Sand’s office argues that the state auditor has wide-ranging subpoena powers when performing audits of state agencies. State law says the auditor shall “at all times have access to all information” related to an agency when performing an audit. Sand also argues that the auditor can review any agency at any time, since state law says the the auditor’s office shall audit each agency annually and “more often if deemed necessary.”
“In accordance with Iowa Code 11.42, Auditor Sand cannot at this point discuss or comment on the specifics of this matter beyond what has been stated in the Court legal briefs, but he looks forward to being able to discuss it in great depth after a report is issued,” the auditor’s office said in a statement.
At the time the regents signed the public/private partnership, it was expected to earn $3 billion over the duration of the partnership.
The university pursued a public partnership following a letter Iowa Gov. Kim Reynolds wrote to board President Mike Richards in August 2018. The letter asked regents’ institutions’ leaders to “explore ways to more effectively use the vast resources that exist on our campuses,” and “leverage their assets.”
The Iowa Supreme Court will hear arguments from the auditor’s office and the regents on Feb.16.
A state Board of Regents spokesperson did not immediately responded to a request for comment.