Westside school district suing Omaha Public Schools over funds lost to overpayments

The district is trying to reclaim $10 million funds lost in overpayments to Douglas County, City of Omaha, OPS
Westside's superintendent says the district has tried to work with OPS to recapture property tax dollars its owed.
Published: Oct. 12, 2022 at 4:20 PM CDT
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OMAHA, Neb. (WOWT) - The superintendent of Westside Community Schools announced Wednesday that the district had filed a lawsuit against Omaha Public Schools in its latest effort to secure lost property tax funds.

Dr. Mike Lucas said Westside is trying to get back funds it lost when Douglas County, the City of Omaha, and OPS were overpaid for several years. The district was among several in the county notified earlier this year of the discrepancies.

“We understand the importance of this lost revenue to our patrons, community, students, and staff. ... As a result, based on recommendations from our expert legal counsel, we have now filed a formal lawsuit against Omaha Public Schools to help expedite a solution and recover the money due to Westside and improperly paid to OPS over the course of multiple years,” the superintendent said in a letter posted Wednesday.

Lucas also said in the letter that the district has been making headway with Omaha and the county, but not so much with its fellow school district. Just this year, the city set aside $4 million with the intention of having money it was overpaid through the formula made available — over the course of a few years, not in one lump sum — to pay those who were underpaid.

Westside’s attorney, Mike Coyle, said the district had “no other choice” but to sue, saying in an email that “efforts and amicable inquiries to Omaha Public Schools leadership to resolve this situation have been ignored.”

“Through no fault of their own, the Westside Community Schools was underpaid for a period of time for monies that were wrongfully paid to the Omaha Public Schools, City of Omaha and Douglas County. Efforts and amicable inquiries to Omaha Public Schools leadership to resolve this situation have been ignored.

Accordingly, the Westside Community Schools has no other choice but to seek relief in the Douglas County District Court to get these monies returned to those to whom were rightfully entitled.”

Full statement from Omaha attorney Michael Coyle

Lucas said in the letter that the district hopes the lawsuit will expedite the return of those funds, which were “improperly paid to OPS over the course of multiple years.”

The district filed a similar lawsuit against the Douglas County treasurer in July.

The issue came to light last year after Nebraska state auditors took a closer look at bad math that was happening in Sarpy County. Millard, Gretna, and Springfield-Platteview schools sued the Sarpy County Treasurer for being underpaid in that county, an issue that ultimately led to the firing of then-Treasurer Brian Zuger.

The state determined that Sapry County had been using the wrong formula to determine how government entities and school districts received a certain pot of cash from the Omaha Public Power District, resulting in massive overpayments and underpayments, reaching into the millions of dollars.

That scrutiny revealed that the same mistakes were happening in Douglas County, too, where officials recalculated the way those payments had been determined for the last 60 years.

Nebraska state auditors revealed at that time that the county had overpaid OPS by $5.7 million.

OPS issued a statement on the Westside lawsuit Wednesday afternoon, noting that the error lay with the county, which is why OPS sued the county rather than “fellow school districts.”

The district also stated that it had not yet been served with the lawsuit.

“All school districts share a common goal to prepare the children of our community for success. As Nebraska’s Auditor of Public Accounts has stated, the errors at the heart of Westside Community Schools’ filing were made by the County Treasurer. That is why the Omaha Public Schools chose to initiate its action in Sarpy County against the Treasurer rather than our fellow school districts. Our district has not yet been formally served with legal paperwork and we will remain relentlessly focused on educating the young people we serve.”

Statement from Omaha Public Schools