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Iowa treasurers end scholarships amid ethics law inquiries

By RYAN J. FOLEYMarch 27, 2019

IOWA CITY, Iowa (AP) — County treasurers in Iowa abruptly canceled a scholarship program Wednesday that benefited their relatives and employees amid criticism that the vendor-funded awards were illegal gifts under state ethics law.

The executive board of the Iowa State County Treasurers Association voted to end the program ahead of a previously announced application deadline for high school seniors next month.

“There were too many gray areas,” said association president Linda Zuercher, who is Clayton County’s treasurer. “It’s sad for everybody involved that it has to end.”

The program consisted of four, $500 scholarships that were awarded each year to the college-bound children and grandchildren of county treasurers and their staffs. The money came from two companies that do extensive business with treasurers: GovTech Services, which runs the website that 88 counties use to collect property and motor vehicle taxes, and SRI Inc., which operates tax auctions for dozens of counties.

Since the program’s inception in 2014, critics have worried that the scholarships violated the gift law, which bars public employees and their immediate relatives from accepting money from contractors. In response to concerns raised by Floyd County Treasurer Frank Rottinghaus, the Iowa Ethics and Campaign Disclosure Board issued an advisory opinion in 2015 that concluded that the scholarships were illegal since they were funded by vendors and not open to the public.

Key county treasurers say they were never informed about the opinion until the following year. At that point, they followed legal advice from the Iowa State Association of Counties to continue the program while trying to diversify its funding sources through an annual silent auction. Still, the two companies provided the bulk of the funding for the awards, which were decided by a panel of treasurers.

Questions about the program’s legality resurfaced this month after The Associated Press reported that Dubuque County Treasurer Eric Stierman and Winneshiek County Treasurer Wayne Walter went on vacation with GovTech’s CEO last fall and stayed free of charge in his Florida beach condominium for two nights. Stierman has since told the AP he stayed at the condominium for another night during one prior vacation when the three later met up elsewhere in Florida. Stierman and Walter have said that GovTech founder Marc Carr is a longtime friend. But they have also used their official positions to support his company for major contracts and Stierman was featured for years in a now-removed video endorsement on GovTech’s website.

The condo stays are also apparent violations of the gift law, which contains no exemption for friendship, and have triggered scrutiny from watchdogs and law enforcement. Dubuque County Attorney C.J. May said last week that he was “looking into the matter” after reading AP’s story. Winneshiek’s county attorney said he would await the findings of an investigation by State Auditor Rob Sand’s office before determining how to proceed. Anyone who knowingly violates the gift law can be charged with a misdemeanor and face other sanctions, including possible removal from office.

Walter and Stierman said Wednesday that they have reimbursed Carr hundreds of dollars to cover the cost of the stays. Walter, who has held office since 1984, said that his violation was inadvertent.

“We just thought we were three friends going to spend a couple of nights away,” he said.

Days before that story broke, the treasurers had received an email announcing that SRI and GovTech were “pleased to offer, again this year, four $500 scholarships to children or grandchildren of treasurers or your staff.” The email noted that applications would be due April 26 and scholarships would be awarded in May at a conference for treasurers.

In a statement issued Wednesday, the treasurers association said it regretted the decision to cancel the program, which ended a gift law inquiry by the Union County attorney.

“Congratulations to past winners and for those of you who had students working on this year’s application we apologize,” the statement said.

SRI President Jim Hughes said last week that given the scrutiny, his company was leaning toward ending its support for the scholarships.

“We are not in the business of bringing bad press and concern to our clients,” he said. “If there is a risk of that, we don’t want to participate.”

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