The former chief financial officer of the Iowa Association of School Boards says he raised concerns about the search for a new executive director and was asked to resign about a year ago. The Legislature’s Government Oversight Committee has begun holding public hearings after allegations of “profound” financial mismanagement at the Iowa Association of School Boards.

The group’s new executive director is on paid administrative leave, pending the outcome of an investigation and at least two audits. Jon Muller, the association’s former chief fniancial officer, told legislators he can’t shed much light on what has happened after the new executive director started July 1.

“I can tell you that as of June 30, I don’t believe that there was any financial crisis or inability to make payroll,” Muller said. “…Whatever problems there are, they are problems that have occurred since then.” Muller left the Iowa Association of School Boards on April 1st.

Then, through the end of August, Muller occasionally provided information to the association’s new executive team about the group’s complex financial dealings. Muller answered legislators’ questions for 90 minutes, defending the organization’s financial activities and the operation of a for-profit subsidiary.

Midway through the hearing, Senator Tom Courtney of Burlington and Muller had a heated exchange. “This is an entity that’s completely supported by taxpayers’ dollars. Do you think it’s proper to spin off a for-profit corporation from that when…everything IASB gets it taxpayer dollars?” Courtney asked. Muller replied: “Everything IASB gets, first of all, is not taxpayers’ dollars.”

Courtney quickly replied: “Who else could it possibly be from?” Muller suggested taxpayers from, for example, Illinois pay into the group’s system because the Iowa Association of School Boards runs a “PaySchools” which lets parents in 32 states pay school fees online. “That’s a taxpayer, sir,” Courtney said of parents in other states, as his voice rose in anger. “Just remember that while you’re in this room — it’s all taxpayer dollars.” Courtney also asked Muller to address nepotism allegations.

Two of Muller’s in-laws worked for the association and his sister was the group’s vice president until last fall. “Do you see a conflict there at all?” Courtney asked. Muller replied: “No,sir,” adding that both he and his sister had once worked in the non-partisan Legislative Services Agency, so they had worked for legislators, too. “By the way, all of that was fully disclosed…fully disclosed to the schools, fully disclosed internally and she never reported to me. I didn’t report to her and we didn’t set each other’s salaries.”

Courtney challenged Muller to justify the $200,000 annual salary he was paid as the association’s chief financial officer, then Courtney closed with this: “Do you at least see how this is looks pretty sleazy to me and probably to most people in this room?” Courtney asked. Muller quickly replied: “There’s nothing sleazy about it…I’m here to tell you that there’s nothing improper that went on prior to June 30, 2009.”

Muller told legislators the previous executive director of the Iowa Association of School Boards “ran a good operation.”

Listen to Senator Courtney question Muller during today’s hearing: Courtney/Muller 7:32 MP3