Iowa Treasurer Candidates Clash Over State Investments and IPERS Management

Iowa Treasurer Candidates Clash Over State Investments and IPERS Management

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The race for Iowa State Treasurer comes down to a simple question on Election Day: whose hands should hold the state’s cash while it waits to be spent. Republican incumbent Roby Smith says he has turned that waiting period into a windfall, pointing to more than half a billion dollars now invested in Iowa banks and a record haul of interest. His Democratic challenger, John Norwood, argues the state is still sending too much of its $10 billion in annual tax collections out of state, and that the same hands-off approach has left the state’s pension system exposed to governance questions.

Both campaigns laid out their cases in a report from Iowa Public Radio published November 3, the eve of the vote. Smith, who took office four years ago, said about $150 million in state money was temporarily invested in Iowa banks when he arrived. “I’ve increased that to over half a billion dollars,” Smith said. “That’s a 200% increase.”

Iowa State Treasurer Candidates John Norwood & Roby Smith

The treasurer’s job is to invest taxes the moment they’re paid to the state and withdraw them when they’re scheduled to be spent. In the last fiscal year, Smith said, his office managed $10 billion in state tax collections through temporary investments. “In the treasurer’s office, it’s a scoreboard business, and we put up record numbers,” he said. “I managed $10 billion in the state idle money fund and we have brought in over $1 million a day in interest, an all-time record. To put that in perspective, the previous state treasurer, his last four years brought in $100,000 a day.”

Norwood doesn’t dispute the growth, but he says the total is still too small relative to the pile. Given that the state collects $10 billion in taxes, putting merely $1 billion of that into Iowa financial institutions falls short, he said.

“Keeping more of our Iowa taxpayer money in Iowa, working through our Iowa banks and credit unions is an incredibly important part of this job,” Norwood said. “Banks and credit unions make… loans based on deposits. Deposits help grow the economy. If that money leaves the state, it’s a lost opportunity to grow our Iowa economy, which happens to be in the tank.”

That’s the economic stake in plain terms: every dollar deposited in an Iowa bank is a dollar that can be lent to an Iowa farmer, builder, or small business owner. Smith’s counter is that the numbers speak for themselves — a 200% increase in local investment and interest income that has outpaced the previous administration tenfold.

A Pension Fight Shadows the Race

The candidates also clash over who should pick the chief executive of the Iowa Public Employees Retirement System, or IPERS — the pension fund covering hundreds of thousands of Iowa teachers, corrections officers, and other public workers. Gov. Kim Reynolds recently appointed a new CEO after the previous CEO resigned and another top administrator was fired this spring following an investigation into alleged misconduct.

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Norwood said the pension fund’s board of directors should be involved in selecting the CEO. “We have a CEO that isn’t hired and fired by the board. That’s not in step,” Norwood said. “The mismanagement issues are a reflection of the issues of the governance.” He also cited a lawsuit filed by a fired IPERS employee claiming investment returns were inflated, and argued the public still doesn’t know the full scope of the problems. “Right now, though, we don’t have an independent investigation. We really don’t know the depth of the issues because that has all been swept under the rug,” Norwood said, noting the investigation is internal to the executive branch.

Smith defended the appointment process, noting that a 2003 state law gave governors the authority to appoint the IPERS CEO, subject to confirmation by two-thirds of the state senate — a process used under both Democratic and Republican control. “It is something that has worked,” Smith said. He pointed to the fund’s improved health as evidence: “When I came here in 2011, as state senator, IPERS was funded at about 80%. Today it’s funded at 94.5%.”

“We are a top 10 pension, but what’s most important is we need to keep the promise to current and future retirees,” Smith said.

While Reynolds has stated that the alleged misconduct leading to the firing and resignation involved no financial issues, Smith highlights the pension system’s record, and Norwood points to governance issues and the absence of an independent investigation.

With the treasurer’s office controlling how billions in tax dollars are invested day to day, the outcome will shape everything from local bank lending to the security of public pensions.

What to know about the Iowa Treasurer candidates before you head to the polls

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