State ed board member says overpaid districts ‘stole’ money after overpayment mistakes

The Nebraska Board of Education had a lively debate Friday morning about a school aid miscalculation error that came to light last month, with one commissioner accusing the districts that benefited from the overpayments of essentially stealing the money.

On. Nov. 17, Omaha Public Schools posted a message on its website saying it had received a $30.5 million overpayment.

In the weeks since, the Grand Island Public School district said it received a $3 million overpayment, and Southern School District in Wymore received about $482,000 in overpayments. The school districts will now receive less funding in the future to make up for the extra funding.

In the board meeting Friday, Education Commissioner Brian Maher said many Nebraska schools have been impacted by the miscalculations in aid provided under Nebraska’s Tax Equity and Educational Opportunities Support Act, or TEEOSA.

“Many other school districts will end up with more funding due to the reallocation of funds,” Maher said. “But the exact impacts people would like to know – how much money goes here or how much money goes there, due to this error – are not known, since the recalculation of TEEOSA also includes many other factors that are also updated.”

The commissioner explained in November that the error was within the “poverty allowance” for schools and districts participating in the Community Eligibility Provision (CEP) of the National School Lunch Program.

In a more detailed explanation Friday, Maher said a programmer at the Department of Education pulls funding data, which then goes to the department’s school finance director who independently calculates and verifies the programmer data. According to Maher, that information is used in the TEEOSA calculation and is then presented to school districts for district-level review.

“We’re hopeful that any mistakes would be caught in our assessments, or that we will catch the mistake in partnership with our school districts throughout the state,” Maher said.

Then, Maher explained, the funding assessments are released to school districts for their review. And if mistakes aren’t caught during that round, the final step is a review by the state auditor’s office, which caught these overpayment errors.

“The only piece of good news I can say here is the process for catching mistakes worked,” Maher said. “It worked at the final step, and I think it’s incumbent upon us at the Department of Education to figure out how we can ensure or create a scenario where the likelihood has increased that if such a mistake is made in the future, we catch it sooner, long before it ever goes to the school districts, and long before the state auditor has to worry about correcting our mistake.”

Board member Deborah Neary, who represents a district that overlaps with the Omaha Public Schools district, defended the mistakes made by the department, saying employees have been consistent in clean audits in the past, and that they’re allowed mistakes.

“As a matter of fact, we have always had one of the cleanest audits of any of the state agencies for many, many years,” Neary said. “I’m really proud of our finance team. They’re allowed a mistake once in a while. This is a mistake – and Dr. Maher can’t say this, but I can – that could have been caught on the other end as well. There’s many ways this could have been stopped, but actually, the system worked exactly the way it’s supposed to work, which is, it was found during the audit, which is what an audit is all about.”

The Democrat on the officially nonpartisan Board of Education then ran into fiery arguments launched by Kirk Penner, a Republican who represents a district in southeastern Nebraska. Penner homed in on the fact that the $30.5 million OPS mistake wasn’t caught by the district’s financial team or superintendent.

“The OPS board approves the school budget, which relies on the TEEOSA funds, and they spend every penny – tens of millions of dollars,” Penner said. “Not a single soul questioned the extra tens of millions. Not one person.”

Penner then narrowed in on Neary.

“Deb, you’re going to love this part here, and I need you to listen to me carefully, because you struggle with what I say, OPS and two others of lesser degrees, stole. That’s the word I’m going to use. Stole educational dollars from the other 47 deserving school districts. They stole the hard-earned tax dollars of every citizen in the state, from Crawford to Falls City. Didn’t even blink. Only three options to what actually happened: complete incompetence, a joke of a school funding formula that is very hard to understand, or it was intentional.”

In response to Penner's comments, a spokesperson with the OPS district wrote in an email to Nebraska Public Media News, "NDE has publicly acknowledged its responsibility for the state aid funding error. Through multiple statements to news media and members of the Nebraska Legislature, NDE has taken responsibility for the mistake that created a $61 million budget shortfall for Omaha Public Schools in the 2026-27 school year. Since learning about this from NDE, Omaha Public Schools has communicated openly and directly with the community we serve. We take our responsibility to students, staff, families and our taxpaying community most seriously."

During the board meeting, Penner and Neary then argued about a recent interview Penner did on an Omaha talk show about Department of Education personnel matters regarding the funding miscalculations. In a social media post made Nov. 24, board chair Elizabeth Tegtmeier said the NDE employee who “made the error” is no longer working with the department. Nebraska Public Media News reached out to the department for confirmation. An NDE spokesperson said it doesn't comment on personnel matters.

To close out the funding discussion in the meeting, Maher said he will return to the board in the coming months to bring new ideas on how to better catch funding errors.

The school funding model, which many lawmakers and school officials have said is too complex and convoluted, has been the ire of several state leaders, including Gov. Jim Pillen.

After the funding miscalculation was discovered this fall, Pillen called for eliminating the TEEOSA formula, saying, “This error is another example of how the TEEOSA formula continues to fail Nebraskans. Time and time again, I have said that we must do away with this complex formula that nobody understands and have the state fund schools while providing property tax relief. Unfortunately, this call has fallen on deaf ears with a small group of members of the Legislature, who continue to block any attempt at tax reform.”

By way of full disclosure, Brian Maher is a commissioner on Nebraska Public Media's governing board, the Nebraska Educational Telecommunications Commission.