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Sarpy County treasurer removed from office after state audit

Sarpy County treasurer removed from office after state audit

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The Sarpy County Board voted to remove Brian Zuger from his post as county treasurer following a state audit that detailed a bevy of alleged accounting errors.

The April 13 vote stemmed from findings by the Nebraska Auditor of Public Accounts. The agency last month released an audit of Zuger’s office that described miscalculated tax payments to school districts, inaccurate financial reconciliations and a patchwork system of bookkeeping.

Zuger’s removal took effect immediately. He was elected to the $101,000-a-year position in 2018.

Tracy Jones, the director of Sarpy’s Veterans Service Office, was appointed interim county treasurer. The board will install a permanent replacement within 45 days.

During an administrative hearing April 13 that resembled a trial, the board considered five findings related to the audits. Broadly, those findings accused Zuger of failing to properly distribute in a timely manner various taxes and other forms of revenue to the bodies that rely upon them: school districts, cities and the county government.

Board members voted unanimously that there was “clear and substantial evidence” that Zuger failed to meet certain requirements on four of the five findings.

One of the state audit’s findings centered on the tax payments that the Omaha Public Power District makes to county and city governments and school districts in lieu of paying property and real estate taxes. The utility directs 5% of its gross revenues from the previous year’s retail electricity sales to those entities.

Auditors said Zuger’s office failed to include the tax levies of all school districts in Sarpy County when calculating those tax payments, which apparently led to over- and underpayments to schools and cities by millions of dollars.

Mary Avery — a special audit manager who said she has worked for the Nebraska Auditor of Public Accounts for 42 years — testified that a “ripple effect” occurs when school districts receive incorrect payments.

The state aid formula that provides money to school districts is based on the amount of local revenue each district receives. If an incorrect payment is recorded, the difference makes its way into the formula and ultimately is redistributed to other districts, she said.

“It doesn’t just affect Sarpy County,” Avery said. “Schools apparently missed out on payments in a second way related to vehicle registration taxes, according to Deann Haeffner, an assistant deputy state auditor who testified Tuesday.

State law allows counties to retain 1% of such registration fees. When the Nebraska Department of Motor Vehicles launched its VicToRy system in 2019, the system began sending those funds to counties’ general funds. But a separate accounting system at the Treasurer’s Office was also pulling 1% out, resulting in duplicate payments to the county, Haeffner said.

Zuger and his attorney, Robert Schaefer, said during the hearing that Zuger recognized early in his tenure that there were system and employee deficiencies in the office that existed long before he took office in early 2019.

According to Zuger, some school payments were likely incorrect going back decades.

He said he had been working to correct the issues but was slowed down by the pandemic. And in the meantime, out of an “abundance of caution” and “in a good faith effort,” the Treasurer’s Office continued to make payments to tax-reliant bodies, even though Zuger was aware they may not be correct, Schaefer said.

Schaefer and Zuger stressed that no money has been deemed stolen. And Zuger said his office has already fixed many of the deficiencies.

Schaefer had objected to the proceedings, contending that the County Board did not hold the authority to decide Zuger’s fate. He argued that a district courtroom would have been the appropriate venue for such proceedings. He filed a suit April 12 to have a Sarpy County District Court weigh in on that disagreement, which did not happen before the hearing.

County officials pointed to two state statutes that give county boards authority to remove the treasurer if the officeholder “fails or neglects to account” for money due to tax-reliant bodies.

reece.ristau@owh.com, 402-444-1127, @reecereports

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