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Four school districts sue Sarpy County treasurer for $6.5 million in missed payments

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The Omaha, Millard, Gretna and Springfield Platteview school districts are suing interim Sarpy County Treasurer Trace Jones for allegedly refusing to pay $6.5 million for missed tax payments.

Four Omaha area school districts are suing the Sarpy County treasurer for allegedly failing to repay more than $6.5 million in tax payments after being underpaid for three years.

The Omaha, Millard, Gretna and Springfield Platteview school districts filed the lawsuit on Dec. 30. It alleges that Trace Jones, interim Sarpy County treasurer, has refused to pay back what the county owes them in tax payments, despite recommendations from state audit officials.

In March 2021, the school districts were part of a 75-page audit report published by the Nebraska Auditor of Public Accounts.

The audit showed that the Sarpy County treasurer at the time, Brian Zuger, miscalculated distributions to school districts from 2018 to 2020.

He also conducted inaccurate financial reconciliations and had a patchwork system of bookkeeping in an office that oversees about $130 million on a daily basis.

The payments were funds that the Omaha Public Power District makes to county and city governments and school districts in lieu of paying property and real estate taxes — called payment in-lieu of taxes (PILOT). The utility directs 5% of its gross revenues from the previous year’s retail electricity sales to those entities.

The lawsuit says Zuger’s office failed to include the tax levies of all school districts in Sarpy County when calculating those tax payments, which reportedly led to over- and underpayments to Omaha area school districts and cities by millions of dollars.

The Omaha Public Schools was underpaid by $1.4 million, according to the lawsuit. Millard Public Schools missed out on a $2.3 million payment.

The lawsuit alleges Gretna Public Schools was underpaid by $721,774, while Springfield Platteview Community Schools didn’t receive $1.9 million in funds.

Bellevue Public Schools was also reportedly overpaid by more than $2.3 million, and Papillion La Vista Community Schools received $946,054 more than it was supposed to receive, according to the lawsuit. Both schools weren’t included in the lawsuit, and officials from both districts declined to comment.

Sarpy County and some cities around the Omaha metro area were also overpaid, but the school districts’ incorrect payments account for more than half of the $12.5 million in calculation errors, said Dakota Christensen, senior auditor for the State Auditor’s Office.

Christensen said he wasn’t sure what the process was to correct overpayments, but the errors will have a widespread impact on multiple school districts in Nebraska.

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 will cause other districts to be over or underpaid.

The state auditor said in its report that it recommends “the county treasurer correct the erroneous distributions.” It also said the treasurer should implement procedures to prevent the mistake from happening in the future.

In April 2021, Zuger was removed from office during an administrative hearing by the Sarpy County Board. Jones has been serving as interim treasurer.

“Despite the state auditor’s recommendation that the treasurer make the correct payments to the school districts, the treasurer has not done so,” said Steve Davidson, the attorney representing all four districts.

In April 2021, Jones sent a letter to the Omaha area school districts and cities that receive scheduled payments, saying the “county will not be making retroactive adjustments to prior PILOT payments.”

Sarpy County declined to comment on the reasons behind the refusal, citing the pending litigation, said Bonnie Moore, chief deputy county attorney.

In the lawsuit, the districts request to be paid back the funds owed, along with court costs.

“The parties are working closely with Sarpy County and remain optimistic that a solution can be achieved without further litigation,” Davidson said.

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